Analysts give thumbs up to Sime Darby’s buy

February 26, 2012

Analysts give thumbs up to Sime Darby’s buyMALAYSIAN conglomerate Sime Darby’s acquisition of a 95% stake in Indonesian company PT Indo Sukses
Lestari Makmur for US$4.36 million has been given the thumbs up by analysts. It has been reported that the
acquisition, through its indirect wholly-owned subsidiary PT Minamas Gemilang involves a “minimal investment”
while the development cost is over a 15-year period.

PT Indo Sukses, which is involved in the forestry business, has applied for an exploitation licence from
Indonesia’s Ministry of Forestry (MOF) for over 10,000 ha of rubber forest in East Belitung Regency, Bangka Belitung Province. The deal will involve PT Minamas Gemilang buying 3,500 and 300 ordinary shares in PT Indo Sukses from SLT Capital and PT Entete Mining respectively and is dependent on PT Indo Sukses’s obtaining the
exploitation licence from Indonesia’s MOF.

Sime Darby’s plantation business is principally in oil palm, with about 314,000 ha planted in Malaysia and
208,000 ha in Indonesia. The deal is not expected to have a significant impact on Sime Darby’s earnings in the 2012-2014 financial years as the land needs to be developed and it is “small” compared with the conglomerate’s land bank in Malaysia and Indonesia.

Analysts also point out that the deal is competitively priced since recent rubber plantation land transactions in Malaysia and Thailand have been priced between RM20,000 and RM25,000 per ha.(PRA)

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