KUALA LUMPUR: Sime Darby Bhd said the ongoing protests in Hong Kong have not caused damage to the company’s assets there and that any impact on its car sales so far is immaterial.

The Hong Kong market contributes 5.9% of the group’s total revenue, Sime Darby group chief executive officer Datuk Jeffri Salim Davidson told a press conference yesterday after the group’s annual general meeting here.

The group, he said, has no intention to exit its business there as it still views Hong Kong as a mature and affluent market that serves as a gateway to the larger Chinese market, where the luxury and super-luxury brands it carries, such as BMW, Rolls-Royce, Lamborghini, and McLaren, are doing well.

“It [Hong Kong operation] is actually quite a smallish business... Generally, our car business there is more affected.

“[But] in the general scheme of things, the [sales impact] is not material because Hong Kong is small compared to China,” he said, adding that there has been no damage to its assets there.

“We have been in Hong Kong for so many years ... my immediate reaction is to just hunker down and wait for this (the unrest) to pass. Although this is taking longer than expected, hopefully it settles down soon,” he said.

Jeffri added the group, through its “very profitable” Caterpillar dealership, supplies a lot of heavy equipment to big projects, the Hong Kong government’s dockyards, regular roadworks and mass transit railway extension works in Hong Kong, under its industrial business segment.

Sime Darby has 1,200 employees in Hong Kong — 970 with its motor division and the rest with its industrial division. Their safety, Jeffri said, is the group’s priority.

The 1,200 employees account for 6% of Sime Darby’s group-wide staff strength of 20,000 worldwide, according to group chief financial officer Mustamir Mohamad.

Meanwhile, Sime Darby has allocated RM500 million to RM600 million for maintenance spending for the financial year ending June 30, 2020 (FY20) — compared with RM380 million in FY19 — mainly for its industrial and motor segments.

This excludes RM893 million spent on acquisitions for the Caterpillar dealership and transport business of the Gough Group Ltd in New Zealand, and three luxury motor dealerships in Sydney, Australia.

The Gough Group acquisition was completed in September, while the Sydney motor dealerships are on track for completion by year end, according to Jeffri.

Mustamir said the group is on the lookout for more acquisitions in the industrial and motor space.

The group is also seeking for both greenfield and brownfield opportunities in the healthcare sector, after losing out on the Columbia Asia deal in September, which Jeffri said was a matter of valuations.

“Our intention is to grow... we looked at the Columbia Asia deal, which was not quite successful, but the intention is still to expand, greenfield and brownfield,” he added.

Jeffri also reiterated Sime Darby’s intention to divest its non-core assets, which may include a 12% stake in property developer Eastern & Oriental Bhd, a 3,518ha land as part of the Malaysia Vision Valley land in Labu, Negeri Sembilan, and a 30% stake in hypermarket operator Tesco Stores (Malaysia) Sdn Bhd.

“The whole idea of the [2017] demerger is for Sime Darby Plantation [Bhd to] focus on plantation, Sime Darby Property Bhd [to] focus on property and for us to focus on trading.

“Again, it is the question of right timing. The first question if [the asset] is core or non-core to our business, and then to look at the best ways to exit. We are in no hurry to do a cheap sale,” Jeffri said.

At yesterday’s close, Sime Darby shares settled two sen or 0.85% down at RM2.34 apiece, bringing it a market capitalisation of RM15.92 billion.