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One of the oldest conglomerates in Malaysia, Sime Darby Bhd looks to spend RM1 billion ($241 million) annually on acquisitions and organic growth.

Said Group Chief Executive Officer Jeffri Salim Davidson in an interview with The Edge Markets, “We have the capacity to gear up to grow (and) we are very clear where we want to grow.” He further added that their gearing ratio is considered low at 0.3 times.

Sime Darby Bhd looks to expand selected segments of their market, including their luxury car business, healthcare services, and selling industrial equipment, he announced after their general meeting on 14th November 2019.

Sime Darby’s stock has outperformed the spin-off of its plantation and property units by 26% from its reference price on Nov. 30, 2017, while Sime Darby Property Bhd took a slump of 45%. Sime Darby Plantation Bhd took a less painful hit at a decline of 9%.

Other businesses that Sime Darby Bhd has acquired include a luxury car dealership in Australia and Caterpillar Inc distributor in New Zealand.

After they lost their bid to acquire Columbia Asia Hospitals’ Southeast Asian assets against Hong Leong Group and U.S. buyout firm TPG Capital in September 2019, Jeffri said that the Group is keen to acquire healthcare assets. The main market they are looking at are Malaysia and Indonesia.

Jeffri states that the luxury and super-luxury car markets in China are also attractive, adding that the protests in Hong Kong have not affected the business. According to Jeffri, “There’s a hugely fast-growing middle class (in China),” and “Chinese guys, they want to have a Louis Vuitton handbag, they want to have a BMW or Rolls-Royce, they are brand conscious.”

As opportunity arises, Sime Darby will continue to build up its core assets while shedding its non-core assets. Its non-core businesses include a 12% stake in the Malaysian property developer Eastern % Oriental Bhd, a 30% stake in Tesco Malaysia, and four major city ports in Chinese cities Weifang and Jining.

(18 November 2019)


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Congrats for making the moves..