Tuesday, September 02, 2008

Sime's Plantation Division's profit dropped q-o-q

Sime announced its results for 4Q2008 ended 30/6/2008. Its net profit dropped 6.3% q-o-q from RM1.09 billion to RM1.02 billion while turnover increased by 5.6% from RM8.64 billion to RM9.12 billion. Net profit has however increased by 60.5% when compared to the same quarter last year, while turnover was up 16.5% in the same periods.

The main concern was the drop in the profit recorded by the Plantation Division for the current quarter. Despite the increase in the average crude palm oil price realized of RM3,285 per tonne compared to preceding quarter of RM3,101 per tonne, this division suffered from lower production and sales volume, coupled with the higher production cost resulting from the hike in fuel price. The drop in profit in the Plantation Division was very surprising when others plantation groups (such as IOI Corp & Asiatic) had actually reported improved performance for the same calender periods from April-June.

As expected, Sime share price had rebounded from its strong support of RM6.30 (go here). Its immediate resistance is at RM7.00; RM7.70; and, RM8.00. Its support will be at RM6.30 & RM5.80.

Chart: Sime's weekly chart as at August 29th (source: Quickcharts)

Based on the poorer results recorded by Sime's Plantation Division vis-a-vis other plantation groups, Sime's share price performance is likely to lag other plantation stocks.

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