Sime Darby Plantations – is this a growth company?

Since its listed on Bursa Malaysia in Nov 2017, its revenue grew at 24 % CAGR (2018 to Sep LTM 2023). Over the same period net income grew at 56 % CAGR. But its total assets only grew at less than 3 % CAGR.

So, is this a growth company? What do you look at when assessing whether a company is a growth one? Professor Damodaran opined that we should link growth to the business fundamentals. Growth needs to be funded and can be estimated from the fundamental equation of growth = Return X Reinvestment rate.

I estimated that over the past 5 years, its Return as measured by the NOPAT/Capital averaged 6%. Its Reinvestment rate average 12%. Growth was less than 1 %. So is this a growth company?

Why is growth important from an fundamental investor perspective? This is because the intrinsic value depends on what you estimate as the growth rate. If you want to explore this growth issues further, refer to “Do you want to know how to value growth companies?” https://www.i4value.asia/2022/11/is-there-best-way-to-estimate-growth.html#more