Sime Darby shares drop after peaking YTD high


SIME Darby Bhd’s upward price trajectory has been cut down by the Covid-19-related news flow and selling by institutional funds.

The stock closed 1.67% or four sen lower at RM2.36 last Friday after peaking at a two-year high of RM2.59 the previous week.

“Personally, I think Sime Darby’s share price rose because of the quarter-end window dressing activity,” an analyst who spoke briefly on the condition of anonymity told The Malaysian Reserve yesterday.

From a technical perspective, the stock is resting above its previous RM2.35 resistance level as AmInvestment Bank Bhd stated in a technical note on Sept 23.

“With its RSI (relative strength index) indicator pointing upwards, coupled with higher trading volume, we think there could be a technical breakout towards the short-term target price of RM2.43 followed by RM2.47.

“In this case, the downside support is marked at RM2.27, whereby traders may exit on a breach to avoid the risk of a further correction.

Interestingly, based on Bursa filings dated Sept 2, 2020, and Sept 29, 2020, Sime Darby had seen active trading by its major shareholders; with some 40 filings.

Institutional shareholders like AmanahRaya Trustees Bhd — Amanah Saham Bumiputera, the Employees Provident Fund Board, Yayasan Pelaburan Bumiputera, Permodalan Nasional Bhd and Retirement Fund Inc have generally been scaling down their stakes in the conglomerate.

Sime Darby saw its net profit for the fourth quarter ended June 30, 2020 dipping 3.8% to RM177 million from RM184 million in the same period last year, and recorded a revenue drop of 5.4% year-on-year (YoY) to RM8.82 billion from RM9.32 billion.

This was mainly due to the adverse effects of the coronavirus outbreak, as reflected in the motors division, and impairment on assets.

For the full year, the group’s net profit slipped 13.5% YoY to RM820 million from RM948 million previously, while revenue was up 2.2% to RM36.93 billion from RM36.16 billion.

This was mainly due to the recognition of a deferred tax credit of RM129 million arising from the change in Real Property Gains Tax rates in Malaysia in the previous financial year.

Excluding the item, the group’s net profit would have been comparable to that of the previous year, the company said in a Bursa filing on Aug 27, 2020.