PNB's Plantation Cos Stk Buy Puzzles Analysts

Recent moves by Permodalan Nasional Berhad (PNB) to increase its stake in Synergy Drive questioned by investment fraternity, relating to PNB's motive and impact on market liberalization. Analysts estimate PNB's purchases costing MYR2 billion, have pushed up shares of Sime Darby, Kumpulan Guthrie and Golden Hope (all being merged under Synergy Drive); could mean Synergy Drive would be incurring higher transaction costs of MYR45 billion from MYR31 billion, possibly reducing ROE to 7% from 9%. Move could trigger downward rerating of share prices by analysts, says The Star. Other negative effects include reduction in funds for future expansion if high dividends were paid or shares bought back to top up shareholders' funds, and efforts to boost short-term profit adversely affecting its future prospects. Sime Darby last down 0.5% at MYR9.95, Guthrie down 1.5% at MYR6.70, GHope down 0.6% at MYR8.50.