Sime Darby Bhd builds up war chest to buy hospitals, car sellers

TheEdge Fri, Nov 15, 2019 09:52am - 4 years View Original


KUALA LUMPUR (Nov 15): Sime Darby Bhd, one of Malaysia’s oldest conglomerates, is looking to spend RM1 billion ($241 million) each year on acquisitions and organic growth.

“We have the capacity to gear up to grow,” Group Chief Executive Officer Jeffri Salim Davidson said in an interview, adding that its gearing ratio was low at 0.3 times. “We are very clear where we want to grow.”

The company is seeking to expand its business of selling luxury cars and industrial equipment as well as providing health care services, he said after its annual general meeting on Thursday.

Since the spin-off of its plantation and property units, Sime Darby’s stock has outperformed both to gain 26% from its reference price on Nov. 30, 2017. Sime Darby Plantation Bhd. has declined 9% and Sime Darby Property Bhd. has slumped 45%. 

The conglomerate has been buying up businesses including a Caterpillar Inc distributor in New Zealand and luxury car dealership in Australia.

Sime Darby is keen to acquire health care assets, Jeffri said, after it lost a bid to buy Columbia Asia hospitals’ Southeast Asian assets to Hong Leong Group and U.S. buyout firm TPG Capital in September. It’s actively looking at Malaysia and Indonesia, he said.

Brand Conscious

China’s luxury and super luxury car markets are also attractive, Jeffri said, adding that protests in Hong Kong haven’t affected its business.
“There’s a hugely fast growing middle class,” in China, he said. “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 it builds up its core businesses, Sime Darby will keep shedding non-core assets when the opportunity arises, he said.

Its non-core businesses include four major city ports in Chinese cities Weifang and Jining, a 30% stake in hypermarket chain Tesco Malaysia, and a 12% stake in Malaysian property developer Eastern & Oriental Bhd.
 

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