This article first appeared in The Edge Malaysia Weekly on December 23, 2024 - December 29, 2024

AUTOMOTIVE and industrial equipment player Sime Darby Bhd (KL:SIME) is understood to be in talks to acquire a chunk of the retail and after-sales business of Ingress Corp Bhd, sources familiar with the matter tell The Edge.

They say the talks are at an advanced stage and involve Sime Darby taking control of the retail and after-sales operations of BMW, Mini and perhaps even Perodua (Perusahaan Otomobil Kedua Sdn Bhd), with the deal likely to be concluded as early as January next year if all goes well. It is understood that Sime Darby is looking to acquire an 80% stake in the business.

There is some uncertainty surrounding the acquisition of Perodua sales and service, but it is likely to be in the mix as Sime Darby completed the takeover of UMW Holdings Bhd, which has a 38% stake in Perodua, in February.

In an emailed response to whether it was indeed eyeing a stake in the retail and after-sales business of Ingress Corp, Sime Darby says: “Sime Darby, as a listed entity on Bursa Malaysia, is committed to exacting disclosure requirements, and will keep the market informed when there are any appropriate and pertinent announcements.”

The acquisition could be a substantial one considering that Ingress Corp’s BMW sales outlets in Damansara and Puchong are carrying a lot of stock. The company also has a BMW body and paint workshop in Kepong and workshops in Damansara and Puchong that are said to be part of the takeover. The Mini sales outlet is in Bangsar, while its service and repairs are undertaken in the same facility as the BMW service centre in Damansara.

Ingress Corp also holds Mitsubishi and Volvo dealerships, as well as has an automotive components manufacturing division, headquartered in Bangkok, Thailand, under publicly traded Ingress Industrial (Thailand) pcl. The Malaysian company has been active in the energy and utility sectors since 1994 through its subsidiary Multi Discovery Sdn Bhd, which specialises in electrical power technology solutions, including high-voltage systems, substations, transmission lines, power cables and smart grid technologies.

To put things in perspective, most local auto players have not been performing well, largely because of the influx of Chinese marques into the country, which has adversely impacted sales numbers. Sime Darby, however, is a giant in the auto industry and undertakes the assembly of motor vehicles.

Ingress Corp chalked up an after tax profit of RM9.67 million on the back of RM1.7 billion in revenue for the financial year ended Jan 31, 2024 (FY2024). It was profitable for the first time in five years.

As at end-January, the company had total assets of RM1.3 billion and total liabilities of RM982.69 million. Notably, its current assets were pegged at RM559.14 million while its current liabilities stood at RM678.33 million.

Ingress Corp is controlled by privately held Ramdawi Sdn Bhd (88.98%), Datuk Rameli Musa (10.19%) and Ab Wahab Ismail (0.83%). Ramdawi is 70:30 owned by Rameli and Ab Wahab. Ingress Corp was delisted from Bursa Malaysia and taken private in 2013.

It is understood that the acquisition by Sime Darby has received the green light from Germany-based BMW AG.

Sime Darby, via wholly-owned Sime Darby Auto Bavaria Sdn Bhd, is the largest authorised dealer of BMW vehicles in Malaysia, offering a complete range of products and services for BMW and Mini vehicles. It has showrooms in Penang, Kuala Lumpur, Ara Damansara and Balakong in Selangor, and Johor Bahru and Tebrau in Johor, as well as a standalone BMW Premium Selection showroom in KL’s Chan Sow Lin and BMW and Mini Service Fast Lane in Chan Sow Lin and Penang.

Sime Darby — via wholly-owned Sime Darby Motors Sdn Bhd, the automotive arm of the group — is involved in the retail, distribution and assembly of vehicles and has a presence in 10 markets across Asia-Pacific, including Australia, China, Thailand, Malaysia, Singapore, Indonesia and New Zealand.

Some of the marques under its belt that are distributed in Asia-Pacific include Alfa Romeo, Fiat, Rolls-Royce, BMW, Mini, Toyota, Perodua, Porsche, Ford, BYD, Volvo, Suzuki, Jaguar, Hyundai and Ferrari. In the commercial vehicle segment, it has Hino, UD Trucks, Mitsubishi Fuso and Mack brands, to name a few.

Sime Darby also has an industrial division involved in the sale of new and used heavy equipment, power systems, product support, equipment rental, rental services and industrial solutions for brands such as Caterpillar, across 14 countries and territories in Asia-Pacific, including Australia and China.

As at end-September, Sime Darby had bank balances, deposits and cash of RM2.61 billion. It also had short-term borrowings of RM5.64 billion and long-term debt commitments of RM4.31 billion. These translate into a net gearing of 54.1%, according to AskEDGE. It had total reserves of RM8.87 billion.

For its first quarter ended Sept 30, 2024 (1QFY2025), Sime Darby chalked up a net profit of RM800 million on the back of RM18.26 billion in revenue. This compares with a net profit of RM589 million from RM13.98 billion in revenue in the previous corresponding period.

Sime Darby’s shares ended trading at RM2.27 apiece last Friday, translating into a market capitalisation of RM15.47 billion for the group.
 

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