PETALING JAYA: The focus will now be on conglomerate Sime Darby Bhd’s demerger of its plantations and property assets.

Analysts said the company broadly met market expectations for its third quarter ended March 31 financial results that was released on Wednesday.

CIMB Research, which kept an “add” call on the stock with a higher target price of RM10.10 per share from RM9.80 previously, remains upbeat on the demerger exercise. “We remain positive on this exercise due to potential value creation from the demerger,” it said, adding that the company will restructure borrowings before seeking approval from authorities for the exercise.

The demerger will be undertaken through a share-distribution by year-end.

Kenanga Research reiterated a “market perform” call with an unchanged target price of RM9.50 and maintained financial year ending June 30, 2017 (FY17) and FY18 core net profit forecast of RM2.33bil and RM2.29bil.

“Our plantation segment valuation is unchanged at 26 times, implying a 5% premium to average big-cap price-to-earnings ratio of 25 times.

“We believe the market has already fully priced in the proposed listing structure of the plantation and property divisions based on our sum-of-parts valuations,” it noted in a report.

While Sime’s plantation and property arms listing exercise were on track, Kenanga opined that the overall property and industrial outlook was rather lukewarm on lingering soft sentiment and ongoing business reviews. The house said Sime’s motor divison was slightly positive on new model releases.

Meanwhile, UOBKayHian Research has kept a “hold” call with a target price of RM8.65, based on a higher price-earnings of 22 times on a fully diluted FY18 forecast earnings per share.