KUALA LUMPUR (Jan 6): Over the years, as the dynamics of its major markets changed, Sime Darby Bhd’s operations in China and Australia have eclipsed those at home in Malaysia. Nevertheless, the recent acquisition of a majority stake in UMW Holdings Bhd is expected to raise the contribution of its operations in Malaysia.

With UMW Group becoming part of the group, Sime Darby’s Malaysian operations look set to become as significant as its Chinese and Australian businesses, allowing the group to fire all three of its engines going forward.

But the RM5.84 billion cash considerations to take over the shares in UMW will lead to an increase in Sime Darby’s gearing to 0.78 times, from 0.49 times. Sime Darby is already planning to pare down its debts using the proceeds from the disposals of its non-core assets, including its 50% stake in Ramsay Sime Darby Healthcare Sdn Bhd.

Is it an acquisition that will change the game for the group? For Sime Darby group chief executive officer Datuk Jeffri Salim Davidson, it is, as not only the group’s Malaysian operations will be as big as the Chinese and Australian counterparts, but it will also expand the group’s footprint in the local automotive market.

Sime Darby will now be an indirect shareholder of Malaysia’s largest carmaker, Perusahaan Otomobil Kedua Sdn Bhd (Perodua). It will also have a larger share in the non-national segment of the automotive market, through UMW Toyota Motor Sdn Bhd.

Nevertheless, the automotive market is changing. With more marques shifting towards the agency model from a dealer sales model, what does the future hold for Sime Darby, who is a major dealer for BMW, MINI, Hyundai and BYD in the country?

And as the saying goes, the proof of the pudding is in the eating. Will the acquisition of UMW become the catalyst to a more aggressive Sime Darby, both in Malaysia as well as in its foreign markets?

In our second cover story, we delve into the external and internal factors that will determine the trajectory of the FBM KLCI this year.

After closing at 1,454.66 points last year, the benchmark index opened the new year by inching upwards even while regional indices fell. Read what heads of research make of the market forces that are shaping the local market, and whether the KLCI will exceed the 1,600-point mark as predicted by experts.

Also, how did stocks picked by fund managers, heads of research and The Edge fared? What stocks are on this year’s list?

Find out in this week's issue of The Edge Malaysia.

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