Sime Darby (Hold; TP: RM9.82) - Buys into Jimah power plant?

Sime Darby (Hold; TP: RM9.82)

Buys into Jimah power plant?

• According to Star Biz, Sime Darby is considering acquiring the 1,400MW coal-fired Jimah power plant in Port Dickson for more than RM1.1bn. Sime Darby is currently carrying out a due diligence on the power plant.
• Premature to assess the impact on earnings given the lack of information on Jimah’s profitability and source of financing.
• While the potential inclusion of Jimah power plant will contribute stable earnings and cash flow to Sime Darby, we believe the pricing is critical in determining whether the deal would be beneficial to Sime Darby.
• SOP-derived TP of RM9.82 remains unchanged. 

Source: HLIB Research 6 March 2012