To break up Sime Darby or not?

Khairie Hisyam

Modified 14 Sep 2015, 6:18 am

KINIBIZ As conglomerate Sime Darby’s results for the financial year ended June 30, 2015 (FY15) were released in end-August, the emerging picture was abundantly clear: the behemoth, having posted arguably its worst full-year performance since relisting as the new entity in 2007, is facing a crunch.

On one front, the group is grappling with prolonged downturn in terms of its major core businesses, which have dragged earnings down heavily. In addition, the turbulence came at a time when the group is trying to manage a substantial spike in borrowings over the past year, which has put a strain on its balance sheet and putting it at risk of a rating downgrade.

A more long-term problem is that Sime Darby, nearly eight years after returning to Bursa Malaysia on Nov 30, 2007, has been losing value. Its closing price of RM7.50 per share on Sept 2, 2015 put its market value at RM46.6 billion, 21 percent lower than its initial public offering (IPO) valuation of RM59.5 billion in 2007.

To be fair, however, a substantial part of this decline can be attributed to selling pressure pervading the stock exchange in recent months.

Combined, these issues pose a difficult question: how does Sime Darby address them going forward?

For the full story go to KINIBIZ .

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