KUALA LUMPUR: Sime Darby Bhd is still looking for ways to unlock the value of its motor division. However, the current weak market sentiment is making an initial public offering (IPO) difficult.

Meanwhile, the conglomerate yesterday announced its proposed share placement to raise up to RM2.38 billion or RM7.51 per share to local and foreign investors.

On the sidelines of the conglomerate’s latest quarterly earnings’ presentation, president and chief executive Tan Sri Mohd Bakke Salleh said the problem with listing Sime Darby Motors Sdn Bhd right now is that the company would not get a valuation that is greater than the sum of its parts.

During the press briefing, Mohd Bakke said “it’s a work in progress” when asked about updates on Sime Darby Motors’ IPO. “We are still working on it. So I can’t say much,” he said.

Media reports then said Sime Darby had engaged with investment banks with the intention to float the automotive company by the middle of last year, before postponing it indefinitely.

Sime Darby made a net profit of RM1.14 billion in the fourth quarter ended June 30, 2016, up 13.4% from the year prior — thanks to recognition of a special tax incentive from Indonesia. Revenue, however, fell by 8.8% to RM11.73 billion.

For the full financial year ended June 30, 2016 (FY16), Sime Darby’s net profit of RM2.41 billion or 38.43 sen a share was little changed from FY15’s RM2.43 billion or 39.57 sen a share. Revenue for the year inched up by 0.5% to RM43.96 billion.

On its auto division, although its car sales volume fell by 9% to 83,060 units because of the softer consumer sentiment in Malaysia, the division’s pre-tax profit in fact improved by 6.1%, as super luxury car sales segment picked up in China, Singapore, Thailand and Vietnam.

With higher pre-tax profit of RM502.5 million, Sime Darby Motors became the third-largest contributor to the group’s pre-tax profit in FY16.

In FY17, Sime Darby sees the opportunity to capitalise on this segment further with launches of new BMW models and Porsche Cayenne Platinum Edition, said group chief financial officer Datuk Tong Poh Keow.

“We are also expecting a turnaround in the Malaysian businesses, and we hope the new BMW models’ launches will be able to compete with Mercedes-Benz, which has seen strong sales here recently,” she said.

She noted that Sime Darby is seeing the potential of expanding the capacity of Inokom’s assembly in Kulim, Kedah, to cater for the Asean market.

Tong told reporters that Sime Darby’s proposed 5% share placement, which is expected to be completed by end-2016, is mainly to consolidate its financials while at the same time to fund its growth in FY17.

The group will use half of the placement proceeds to continue deleveraging after the purchase of New Britain Palm Oil Ltd. It anticipated its net gearing would fall to 0.29 times after the exercise, from end-June’s 0.35 times, while 40% is allocated for capital expenditure.