Sime Darby: Maintain Hold - SC Sticks to No GO; Awaits Court Hearing

Sime Darby: Maintain Hold - SC Sticks to No GO; Awaits Court Hearing

• SC maintains earlier decision. The Securities Commission (SC) has maintained that Sime does not need to make a mandatory general offer (GO) for shares in Eastern & Oriental (E&O; Not Rated), according to StarBiz last Saturday.
• However, a court hearing is still pending, on whether Sime will need to fork out another ~MYR1.8b in cash for the remaining 70% stake in E&O.
• Under a worst case scenario, privatising E&O will still be earnings accretive but deprives Sime of a valuable war chest for other more profitable ventures. We maintain our HOLD call and unchanged TP of MYR10.80 based on 16x CY13 PER.

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Source: Maybank Research - 13 August 2012