SIME (4197) : SIME – Fundamental Analysis (3 Dec 2014)
SIME Analysis:-
Excel – http://1drv.ms/1AfymzZ
My View:-
- For QoQ and YoY results, please refer "A slow start despite upbeat plantation earnings" by MIDF. I agree with their result analysis. (http://www.midf.com.my/images/pdf/research-Report/Equity-Beat/2014/Sime-A%20slow%20start%20despite%20upbeat%20plantation%20earnings-MIDF-011214.pdf)
- Fair values/Market Timing:
– Absolute EY%:
– Trailing:
– FY14 (EPS: 0.512) – Fair value 10.67 (Fair Value Uncertainty: HIGH)
– R4Q (EPS: 0.555) – Fair value 11.56 (Fair Value Uncertainty: MEDIUM)
– Forward:
– FY15 (EPS: 0.486) – Fair value 10.13 (Fair Value Uncertainty: HIGH)
– FY16 (EPS: 0.567) – Fair value 11.82 (Fair Value Uncertainty: MEDIUM)
– EPS applied to reach the current stock price (9.51): 0.456
- The share price driver will be the potential spin off exercise within SIME business divisions which should allow SIME valuation to be rerated higher as it should emerge as pure planter. As it is, it has been reported by media quoting Tan Sri Mohd Bakke Salleh specifying that the listing of its motor unit is set to be executed in 1HCY15 subject to market conditions.
- Weak commodity prices, volatile FX and slow economic growth in Europe and China – SIME earnings outlook in FY15 will be very challenging.
- Another concern is SIME’s ROIC declined from 11.1% to 9.7%, and FY14 ROIC is below WACC too. This is quite worrying.
– Besides, its CROIC was lower than WACC since 2009.
– SIME is losing its competitive advantage (economic moats)
- I think valuation of SIME is not really attractive now. I will continue to hold SIME.
Latest Financial – Q1 2015 Financial Report (28 Nov 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1808921
At the time of writing, I owned shares of SIME.
http://lcchong.wordpress.com
SIME Analysis:-
Excel – http://1drv.ms/1AfymzZ
My View:-
- For QoQ and YoY results, please refer "A slow start despite upbeat plantation earnings" by MIDF. I agree with their result analysis. (http://www.midf.com.my/images/pdf/research-Report/Equity-Beat/2014/Sime-A%20slow%20start%20despite%20upbeat%20plantation%20earnings-MIDF-011214.pdf)
- Fair values/Market Timing:
– Absolute EY%:
– Trailing:
– FY14 (EPS: 0.512) – Fair value 10.67 (Fair Value Uncertainty: HIGH)
– R4Q (EPS: 0.555) – Fair value 11.56 (Fair Value Uncertainty: MEDIUM)
– Forward:
– FY15 (EPS: 0.486) – Fair value 10.13 (Fair Value Uncertainty: HIGH)
– FY16 (EPS: 0.567) – Fair value 11.82 (Fair Value Uncertainty: MEDIUM)
– EPS applied to reach the current stock price (9.51): 0.456
- The share price driver will be the potential spin off exercise within SIME business divisions which should allow SIME valuation to be rerated higher as it should emerge as pure planter. As it is, it has been reported by media quoting Tan Sri Mohd Bakke Salleh specifying that the listing of its motor unit is set to be executed in 1HCY15 subject to market conditions.
- Weak commodity prices, volatile FX and slow economic growth in Europe and China – SIME earnings outlook in FY15 will be very challenging.
- Another concern is SIME’s ROIC declined from 11.1% to 9.7%, and FY14 ROIC is below WACC too. This is quite worrying.
– Besides, its CROIC was lower than WACC since 2009.
– SIME is losing its competitive advantage (economic moats)
- I think valuation of SIME is not really attractive now. I will continue to hold SIME.
Latest Financial – Q1 2015 Financial Report (28 Nov 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1808921
At the time of writing, I owned shares of SIME.
http://lcchong.wordpress.com
