Kenanga sees Sime earnings at RM4.02b (4197)

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

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

Sime Darby will release its FY12 earnings results on Aug 29.
"We
also 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,"
it 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.

It said plantation
division earnings should be flattish in FY12 as the higher crude palm
oil (CPO) prices fetched would be offsetted by the overall three per
cent decline in fresh fruit bunches to 9.76 million metric tonnes.

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

"Combined with the interim 10 sen
net dividend announced earlier in end-February, we expect FY12 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.
At 11.30 am, Sime Darby's share price was flat at RM9.80. -- Bernama