Sime Darby Property Bhd (SimeProp) continues to attract investor confidence as analysts highlight its diversified income streams and strategic expansions. CGS International Research recently reaffirmed its “add” rating for the stock, maintaining a target price of RM1.90, citing the company’s growing investment property portfolio as a key driver of recurring revenue. The acquisition of logistics warehouses in Selangor and upcoming retail developments like KLGCC Mall are expected to bolster earnings in the coming years.
A significant contributor to SimeProp’s future growth will be its built-to-lease data centers at Elmina Business Park, with the first two phases slated for completion by FY26 and early FY27. Analysts estimate these assets could generate RM119 million in net profit by FY27, accounting for 11% of the group’s earnings. However, challenges remain, including the newly imposed 6% sales and service tax on construction services, which may inflate costs for commercial and industrial projects.
Despite these headwinds, the company’s residential segment—which makes up over half of its sales—remains shielded from the tax hike, helping stabilize profit margins. Analysts caution that higher property prices could dampen demand in the commercial and industrial sectors, potentially delaying purchases. Still, SimeProp is expected to see stronger quarterly earnings as progress billings accelerate in the latter half of FY25.
Looking ahead, SimeProp’s valuation appears attractive, trading at 15 times FY26 earnings, with growth prospects buoyed by its data center expansion and retail assets. Risks include potential losses from its Battersea Power Station project in the UK and slower-than-expected property launches. However, robust sales performance and further diversification into data centers could serve as catalysts for upward momentum. The stock closed at RM1.42 in the latest trading session.