BYD's shift to contract assembly a boon for Sime Darby, but Inokom's capacity a question, says BIMB
KUALA LUMPUR: Chinese electric vehicle (EV) giant BYD Co Ltd's decision to scrap its standalone assembly plant in Tanjung Malim in favour of contract manufacturing has positioned Sime Darby Bhd as a prime beneficiary, according to BIMB Securities Research.
Chinese electric vehicle (EV) manufacturer BYD Co Ltd has decided to abandon its standalone assembly plant in Tanjung Malim, Malaysia, to adopt contract manufacturing instead. According to BIMB Securities Research, this shift positions Sime Darby Bhd as a prime beneficiary, with discussions for the partnership already at an advanced documentation stage.
Sime Motors, a 51% owned subsidiary of Sime Darby, is considered the frontrunner to collaborate with BYD. The move reduces execution and policy risks for BYD's local build-out but hinges on confirming a partner and production timeline, which are not yet public. BYD Malaysia's managing director, Jacob Ma, confirmed the cancellation of the planned 150-acre facility in Perak, which was initially slated for completion in the second half of 2026 with a capacity of 50,000 units.
The decision to discontinue the standalone plant was due to stringent conditions imposed by the Ministry of Investment, Trade and Industry (Miti) on new automotive investments. The new contract assembly model bypasses Miti's export and pricing conditions, which are strictly linked to new, dedicated greenfield investments. With Inokom already operating EV production lines for brands such as BMW, Porsche, Mazda, and Chery, BYD's move allows it to avoid Miti's export and pricing conditions.
However, Inokom's capacity is currently near full, requiring additional investment and lead time to accommodate BYD's volume. Thus, the near-term earnings story may be tempered. Despite the positive developments, BIMB Securities maintains a neutral stance on the automotive sector, favoring national brands and localisation beneficiaries.
Sime Darby is still the top pick with a hold call and a target price of RM2.60. The potential BYD contract confirmation acts as a key re-rating catalyst alongside core industrial profits.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
