Let us quickly revisit the case analysis of the Sime Darby demerger. In our first posting

(link here: https://klse.i3investor.com/blogs/wiz_of_finance/140175.jsp), we mentioned that the plunge in share prices in the first day of trading was the result of:

1)    The misallocation of value based on the reference price, especially given the dividend

2)    Panic selling among shareholders of Sime Darby Property and Sime Darby Plantation

We maintained that the fundamentals of Sime Darby remained unchanged before the re-listings and hence the total share prices should not drop. After a period of irrationality, the price of all three Sime Darby related counters finally retraced to approximately the same price before the re-listings as below. This is as per what we expected.

So..what’s next?

Again, we stand by our opinion that SDPlant would be the counter with the most short term potential as per our posting here https://klse.i3investor.com/blogs/wiz_of_finance/140696.jsp.

With more visibility over the earnings of the individual companies, we opine that SIMEPLT is the most stable blue chip counter among the 3 counters and still have some upside to go when a relative valuation comparison is done among its peers. We also opine that SIMEPROP also has upside potential but given the weak property sentiment at this time, in the short term, there should be some volatility.

Disclaimer: This is not a buy call. Please do your own research before investing.

Cheers,

Wiz_of_Finance

If you are interested in contacting me for more analysis, please contact me at wiz.of.finance@gmail.com