UPDATE 1-Malaysia Sime not mulling plantation IPO soon-source

* Sime Darby plantation IPO "not on the cards" now - source

* Closely reviewing underperforming motor unit - source

* Investors keen for pure play plantation company

* Sime stock up 60 pct this year but underperforms rivals

(Adds details, quotes)

By Niluksi Koswanage and Soo Ai Peng

KUALA LUMPUR, Aug 12 (Reuters) - Malaysian conglomerate Sime Darby (SIME.KL) does not expect to immediately list its plantation business -- the group's key profit driver -- as part of a detailed review of its operations, a source with direct knowledge of the plan, told Reuters on Thursday.

Many investors want Sime Darby to list its prized division to boost the group's lagging valuations and enhance its appeal as a pure play plantations company as it competes with rivals such as Singapore-listed Wilmar International (WLIL.SI).

"Not really. It (the listing) is not on the cards. People are just talking. People have asked us about this but no," said the source, who did not want to be identified due to the sensitivity of the matter.

"Reviewing the motor unit closely is definitely on," the source said, referring to the unit that is facing stiff competition in the regional automobile sector. Analysts say the unit has dragged down the group's valuations.

Sime Darby was not immediately available to comment.

Plantations accounted for about 74 percent of Sime Darby's 2008 profit with the rest coming from property, motor, heavy equipment and energy, according to company data.

"The plantation business is the niche of Sime Darby and they should focus more on this sector so as to improve its efficiency in plantation and uphold its reputation as the largest listed plantation company in the world," said Alan Tan, head of equities at Great Eastern Life Assurance (Malaysia).

Great Eastern owns 0.75 percent stake in Sime Darby, according to Reuters data.

Malaysian Prime Minister Najib Razak recently singled out Sime Darby as one of the government-linked companies that needed to dispose of non-core assets and focus on building up their core businesses. [ID:nKLR484138]

Margins at Sime Darby's motor unit, which owns dealerships for foreign car brands such as BMW, Hyundai and Land Rover, are falling due to cut-throat competition. The business accounted for just 3 percent of Sime Darby's 2008 earnings.

Last month, Wilmar filed to list its China business in Hong Kong, in what sources say could be an IPO worth more than $3 billion. [ID:nHKG305706]

Sime Darby shares ended 0.4 percent higher in the morning session, tracking gains in the broader market .KLSE.

The stock is up 60 percent so far this year compared with a more than 140 percent jump in Wilmar and a 86 percent rise in Astra Agro (AALI.JK), Indonesia's top palm oil planter. (Editing by Anshuman Daga)