SIME DARBY’S (SIME) higher core profit after tax, amortization and minority interest mainly stemmed from lower interest expenses, -28% year-on-year (YoY), thanks to SIME paring down its debt during the period.
Motor segment’s quarter three financial year 2026 (3QFY26) core profit before interest and tax (PBIT) fell 32% quarter-on-quarter (QoQ) to MYR143mil.
The sequential weakness was largely expected, in line with seasonally weaker car sales (-19% QoQ). China sub-segment meanwhile, veered into losses of MYR14 mil due to the absence of rebates from timing issues.
Looking ahead, SIME expects to recognise the rebates in quarter four of 2026 and remains hopeful for its China business to breakeven in 2026.
RHB now forecast a marginal loss in 2026, while expecting a bigger recovery to only come in 2027.
Industrial segment’s revenue slipped 8% QoQ in quarter three this year, bringing the nine months of financial year 2026 revenue to MYR13.5bil.
The QoQ decline mainly came from delayed recognition of data centre projects in Malaysia, with deliveries now in quarter four this year.
Together with lower after-sales contribution, the sub-segment’s core PBIT came in at breakeven level, compared to MYR26mil in 2QFY26.
Consequently, core PBIT margin eased to 5.7% in 3QFY26 compared to 6.4% previously.
So far in quarter four this year, SIME has seen a pickup in after-sales demand, likely driven by higher commodity prices, but it remains wary over potentially higher inflationary costs from miners, following the recent Middle East conflict.
As such, it expects a more notable recovery in the first half of 2027.
RHB advises to keep Buy for the stock. “That said, we believe fundamentals remain intact and any weakness could present an accumulation opportunity,” said RHB.
Key risks identified are the weaker-than-expected margins, and a longer-than-expected downturn in its China business. —May 26, 2026
Main image: Reuters
