UPDATE 3-Malaysia's Sime says to be in profit this year

* Sime expects to "be in the black" for FY 2010

* Media report says yr loss could be up to 2.5 bln ringgit

* Consensus is 1.6 bln rgt net profit

* Shares drop as much as 2.7 percent on report of losses

* Full-day volume traded in less than three hours

(Adds Sime statement)

By David Chance and Niluksi Koswanage

KUALA LUMPUR, Aug 5 (Reuters) - Malaysia's palm-oil-to-property conglomerate Sime Darby (SIME.KL) expects to report a full-year profit later this month, after a media report said it faced losses of up to $789 million.

Sime, Malaysia's No.2 company by market value, has come under investor and media scrutiny after its stricken energy business dragged the conglomerate into its first quarterly loss since its creation three years ago. [ID:nSGE64N1JA]

"Sime Darby would like to clarify that based on its best estimate, it still expects its results for FY10 to be in the black," the firm said in a statement issued late on Thursday.

It did not name a specific figure.

The conglomerate was responding to an unsourced report from the Malaysian Insider news portal (www.themalaysianinsider.com) that losses would be 2 billion-2.5 billion ringgit ($632 million-$789 million) when the firm reports earnings on Aug. 26.

Sime took 1.3 billion ringgit in impairments for energy related projects in the Middle East and construction of the controversial Bakun dam project in the Malaysian state of Sarawak on Borneo island.

Analysts said it was doubtful that Sime's losses could reach 2.5 billion ringgit, noting that it would require approximately 4 billion in impairments at the energy division, which accounts for 5 percent of profit.

"My biggest concern is on Bakun, they are not saying how much the Bakun loss is," said an analyst who covers Sime but who declined to be named due to the sensitivity of the issue. The company is 68.6 percent owned by government pension and investment funds.

The analyst consensus for Sime is for a 1.6 billion ringgit full-year net profit, according to data from StarMine, which weights analysts' forecasts according to their track record.

Sime's stock ended 2.34 percent lower at 7.52 ringgit after falling as much as 2.7 percent earlier in the day.

"Although local government funds hold the bulk of Sime Darby and foreign investors are largely out of the stock market, the news makes Sime Darby a very weak link in the Malaysia story," said Danny Wong, chief executive of Acera Capital that manages about 400 million ringgit in funds.

POLITICAL CAPITAL

Sime's first quarterly losses in January-March led the company to name a new chief executive and its shares have underperformed the Kuala Lumpur index .KLSE by 5.4 percent over the past month. [ID:nSGE65D0CM]

That has created a political headache for a country that is trying to promote its image as an investment destination at a time when its share of foreign direct investment going into Southeast Asia has fallen dramatically.

"The government's strategy for state-owned companies need to be much clearer," said political analyst Khoo Kay Peng.

"Sime Darby and other similar state-linked companies need to be making profits rather than taking on projects that they have little or no expertise in."

The government of Prime Minister Najib Razak has pledged to clean up corruption and liberalise the economy to reverse the sharp downturn in foreign direct investment. ($1=3.167 Malaysian Ringgit) (Additional reporting by Royce Cheah, Razak Ahmad and Neha Singh; Editing by Lincoln Feast and Jon Loades-Carter)