Porsche deal could add RM2.8m per annum in net profit for Sime Darby: Maybank KE

MAYBANK Kim Eng (Maybank KE) estimates that Sime Darby could gain some RM2.8 million (S$900,000) per annum in net profit from its new partnership with Porsche.

This comes after the group on Monday announced it was partnering the German sports car manufacturer to set up the latter's first assembly plant outside of Europe, with production scheduled to begin in 2022.

In a report on Tuesday, analyst Liaw Thong Jung said the "conservative" additional net profit estimate was arrived at after back-of-envelope calculations based on the Malaysian conglomerate's 1,000 units and RM5,000 contract assembly margins estimates.

Maybank KE currently has a "buy" call and unchanged RM2.70 price target on Sime Darby, which is listed on the Bursa Malaysia stock exchange.

Mr Liaw said he was "positive but not entirely surprised" by news of Sime Darby's partnership with Porsche, given tightening CO2 regulations and the gradual phasing out of internal combustion engine vehicles (ICEVs) in the EU by 2035.

Asean being a big potential market for Porsche was another factor driving the partnership deal, in his view.

Positing that Porsche has identified Sime Darby's 53.6 per cent-owned Inokom plant for the contract assembly works, he believes a new facility is likely to be constructed for this purpose.

"We do not rule out Porsche (in its next growth phase) using the Malaysia facility for its Asean/Asia export market," said Mr Liaw.

"One to two models will be completely knocked down here (at the Inokom plant), most likely to be the SUVs Cayenne first, and Macan later. These models are arguably the best-selling ones (volume-wise) here, and the completely knocked-down models will be the ICEVs," he added.