Buying Opportunity: Sime Darby

Sime Darby is a huge conglomerate, originally British-owned and was bought back by Mahathir and team during the dawn raid in the London Stock Exchange (wait, was it Guthrie instead? Yeah, idk...).

Before the share split late last year, the price have been hovering mainly around RM9. This implies that the group at that time did not change much in terms of valuation: the group was able to maintain its competitive edge in its area (while not significantly expanding its business), yet it does not lose significant value from its core strengths. Additionally, it has consistently paying dividends to its shareholders.

After the share split, there is now the current Sime Darby Group, Sime Darby Plantation and Sime Darby Property. It seems that the 3 different companies now still maintain a similar dividend-paying policies, even after the split.

Interestingly, the split has enables you to price out the risks of high-end property and palm oil industries from my estimation of intrinsic value of the current Sime Darby Group. Both industries are facing near- and mid-term challenges.

At its current make up, I estimate a fair instrinsic value of Sime Darby Group to be around RM2.70 - RM2.80. This is despite a perceivable downwards trends in the last 6 months:

Yet, late last week and early this week, the price of the counter was depleted significantly by Mr Market, partially in response to a broad blood shed across Asian markets. Sime Darby Group is now priced at RM2.30.

This represents a nice buying opportunity to acquire some shares from the Group that pays consistent dividends and itself a titan in its industry.