RM270 million is a lot of money. Good deal.

You know why some young people today have a lot of spending power? It’s because of what their parents did long time back yeah. It’s like if someone bought a house in 2007 for example, today the house would have given them lots of EXTRA in capital appreciation. Even if everyone is talking about buyers’ market, these owners who bought much earlier can still afford to smile. By the way, when people talk again in 2035 for example, then those who bought in 2015 would most probably be smiling too. Sime Darby Bhd has a similar story to share too.

Article in themalaysianreserve.com Sime Darby’s current 30% stake in Tesco Malaysia will be sold to Thailand’s Charoen Pokphand (CP) Group. Sime Darby said its wholly-owned subsidiaries, Sime Darby Allied Products Bhd (SDAPB) and Sime Darby Holdings Bhd (SDHB), have entered into conditional agreements with CP Retail Development Co Ltd (CP), Tesco Holdings BV and Tesco plc for the disposal.

The total proceeds to be received by Sime Darby upon completion of the proposed disposal is RM300 million, which consist of consideration for the disposal of 30% ordinary shares to CP, as well as a consideration from Tesco plc for consenting to the transfer of Tesco BV’s shares in Tesco Malaysia to CP. Sime Darby is expected to gain RM270 million from the disposal. Please do read the full article for more details here: Article in themalaysianreserve.com

I also read a bit and there was an analysis as to what Sime Darby could do with the gain. The report in theedgemarkets.com here. If Sime Darby were to pay out these as a special dividends, it could be 1.85 sen per share. Alternatively if they use it to pare down borrowings, then its net gearing ratio will be reduced slightly to 0.11 times from 0.12 times. If you google ‘Sime Darby price’ you will get the below image too. Good base reference.

I do not at the moment have any Sime Darby Berhad shares. Please also do not ask if this is a buy or not a buy. If you refer to the Div yield at the current price, it’s around 4.5%. Compared to the current Fixed Deposit rates, I think the dividend yield is healthy. Do note yeah, past performance does not mean future performance will be the same or better. So, that is a decision you will have to make yourself. Happy shopping online and stay at home!

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