Kenanga expects Sime to post record earnings for FY2012

KUALA LUMPUR: Kenanga Research expects Sime Darby Bhd's core earnings to hit a historical high of RM4.02 billion in its 2012 financial year earnings.

This is in line with the RM4 billion consensus estimate, it said.

Sime Darby will release its 2012 financial year earnings results on August 29.

"We expect the year-on-year core earnings growth to be decent at about four per cent, mainly driven by the 30 per cent earnings before interest and tax growth in its industrial segment to RM1.36 billion," Kenanga Research said.

Strong demand in mining, logging and construction sectors in Malaysia, Singapore and Australasia has also boosted its earnings, it said in a research note.

The research house said the plantation division earnings should be flattish in 2012 financial year as the higher crude palm oil prices fetched would be offsetted by the overall three per cent decline in fresh fruit bunches to 9.76 million tonnes.

"We believe the likely final dividend that will be announced would be eight per cent higher year-on-year against last year's 22 sen final dividend, in line with the improved earnings.

"Combined with the interim 10 sen net dividend announced earlier in end-February, we expect 2012 financial year earnings total net dividend of 33.8 sen, implying a decent net dividend yield of 4.2 per cent," the research firm added.

Kenanga Research expects a 50 per cent payout ratio, in line with Sime Darby's historical practice to pay out a minimum 50 per cent of its earnings.

Kenanga Research's target price for Sime Darby is RM10.30. Bernama