Malaysia's New Giant Sime Darby Jumps on Relisting

Malaysian plantations to energy group Sime Darby relisted on the local market on Friday at a 36 percent premium to its indicative price, after its merger with two other palm-oil groups.

Sime Darby is the world's largest listed palm-oil company and Malaysia's most valuable stock after its merger this year with palm-oil groups Golden Hope Plantations and Kumpulan Guthrie.

"Today is a crucial day," Sime Darby Chairman Musa Hitam told reporters at the stock exchange building in Kuala Lumpur. "Happily for us the market has indicated their confidence in us. Now it's time to deliver."

The indicative price for new-look Sime Darby had been given as 8.90 ringgit a share, based on the last-traded share prices of the three constituent groups. Sime Darby, Golden Hope Plantations and Kumpulan Guthrie were all halted from trade on Oct. 18.

Shares in Sime Darby jumped to a high of 12.10 ringgit in early trade on Friday, valuing the company at around 72.6 billion ringgit (US$21.6 billion), Malaysia's biggest listed company, ahead of the country's largest lender, Malayan Banking Bhd.

After the first 30 minutes of trade, Sime Darby shares had settled back to 11.50 ringgit, representing around 27 times proforma earnings for the enlarged company, roughly in line with pure-play plantation firm IOI Corp.

Sime Darby was to have been renamed Synergy Drive after the merger, but the company changed its mind this week and decided to stick with the Sime Darby brand, among Malaysia's best known.

The company has profited as prices of palm oil, used for food and fuel, have more than doubled since January 2000. Revenue and profit are expected to grow at least 10 percent in fiscal 2008, Musa said on Wednesday, an estimate its chief executive Ahmad Zubir Murshid reckons is conservative.

Almost half of Sime's operating profit is derived from its plantation division.

Commodities, such as soyoil and palm oil, closely track crude oil markets because of their increasing use in making biofuels, which compete with petroleum.