KUALA LUMPUR: The weakness in Sime Darby Bhd
’s share worth is an efficient alternative for traders to build up shares in the conglomerate.
At 9.42am, Sime fell two sen to RM2.13. Year-to-date, the counter has fallen some 7.8%.
“We make no changes to our forecast and target price of RM2.60, which has a 0% ESG premium built in. We think that a circa15% correction from its recent peak has priced in SIME’s near-term headwinds in China.
“Should weakness persist over fears of prolonged lockdowns or of weak 4QFY22 earnings, we believe this is an opportune time to accumulate – ahead of China’s imminent car sales recovery, which would be fuelled by government incentives and pent-up demand,” RHB Research mentioned.
However, the analysis home famous that a number of the key draw back dangers embody longer-than-expected lockdowns in China, a softer-than-anticipated financial restoration in China, weakness in coking coal costs, and lower-than-estimated industrial margins.
RHB mentioned whereas demand for Sime’s electrical automobiles (EVs) in Malaysia is powerful, provide chain points proceed to trigger lengthy wait occasions.
It added that Sime’s EV ambitions have already begun – beginning in China, the place it has secured after-sales partnerships with new EV unique tools producers (OEM) like NIO, Weltmeister and Li Auto.
Accounting for the EV line-up from its current principals, Sime has many new EV fashions in its pipeline that span throughout the mass and premium segments.
RHB has just lately visited Sime Darby’s AutoMetropolis and test-drove EVs from BMW, Hyundai, MINI, Porsche and Volvo.
“Among the six EVs we tested, BMWiX and Hyundai IONIQ 5 have the strongest demand, with c.1,000 and c.600 orders in hand, despite the long wait times.
“We believe the key appeal of EVs include lower cost of maintenance, with most EVs only requiring battery replacements eight years after purchase, and energy cost savings – eg a full charge on a BMW iX will cost circa RM80, versus circa RM170 for a full tank of RON95 on a comparable BMW ICE X5,” it mentioned.
RHB mentioned Porsche, BMW, MINI and Volvo are all experiencing some type of chip and element scarcity, which is limiting their manufacturing.
“We gather that the BMW and Porsche plants in Germany are running at low utilisation rates, as a result. Meanwhile, due to the limited capacity at Hyundai’s Korea plant, Hyundai is not able to cater to the strong global demand for the IONIQ 5,” it added.
