Compared to the preceding quarter, Sime's net profit dropped 15.1% while turnover slid 4.6%. The decline is due to sharply lower contribution from the Property division as well as poorer performance from its Plantation & Energy divisions & lower share of results from Associates & JVs, which had more than offset the improved performance of the Industrial & Motors divisions.
Plantation Division, which account for 70% of Sime's operating profit, will come under close scrutiny. For 1Q2009, Sime secured a lower average crude palm oil price of RM2,962 per tonne compared to preceding quarter of RM3,285 per tonne. How would Sime perform in the next quarter, given that CPO prices are trading at RM1600 per tonne presently? The operating margin of Sime's Plantation division is about 28% (i.e. operating profit of RM968.2 million over turnover of RM3.491 billion for 1Q2009). Since the present CPO prices are 54% lower than Sime's CPO average prices for 1Q2009, this means that Sime could make a loss in its Plantation division for 2Q2009. This maybe a simplistic calculation but I think a more detailed projection will not be too far from this.
As at 3.15 pm today, Sime's share price dropped by 75 sen to RM5.05. From the monthly chart below, we can see that Sime's next strong support is at RM4.90-5.00. If this support is broken, then Sime may test the next horizontal lines at RM4.20 & RM3.30.
Chart: Sime's monthly chart as at Nov 28, 2008 (source: Quickcharts)
Based on serious concern about the performance of Sime's plantation division, I think one should avoid Sime for the next one or two quarter(s).
actually your projection is quite rough, in order to reflect the fact , we must take a glance on their plantation model and later determine what kind of activities lean toward?
ReplyDeletewe must seperate plantation division into 2 parts , before making precise calculation.
1.estate-based
ffb + mill,into cpo, thereafter export.
2.other , such as
blending oil , selling clonal seed, nursery, eleochemical etc.
in the 1q sept08 , the plantation division contribute 3.5b of revenue.
but the estate-based just contribute half of it.
lets count it and see what it comes :
585,777mt cpo
realised price RM2,962 per mt cpo
realised revenue 1.7b
as we know,the current production cost from sime's estate could be RM1100 and even less than RM1000.
conclude that most of the peer is profitable.
actually i take a pessimistic view in long term , but optimistic in short term technical rebound.
regards to your blogging effort.