Thursday, August 5, 2010

Sime Darby falls to 1-yr low

KUALA LUMPUR: Shares of SIME DARBY BHD [] fell to a one-year low in intra-morning trade on Thursday, Aug 6 on growing concerns about possible large provisions from its oil and gas division in the fourth quarter.

At 11.46am, it was down 21 sen to RM7.49 with 5.35 million shares done. The FBM KLCI fell 2.87 points to 1,359.87.

The share was at the lowest since July 17, 2009 when it fell to RM7.45.

CIMB Research maintained its Neutral recommendation on Sime Darby and the target price of RM8.15.

It said a news report of further huge provisioning from its oil & gas division in 4Q is likely to overhang the share price until the group is able to clarify this issue.

"This will happen when it announces its 4Q results and the results of the forensic audits have been finalized," it said.
Based on the potential loss reported, CIMB Research estimated that it could set back its sum-of-parts by 11 sen to 19 sen.
"For now, we are retaining our earnings forecasts and target price of RM8.15, which factors in a 10% discount to SOP in view of the ongoing uncertainty over corporate governance and the group's direction," it said.

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