SEMBCORP INDUSTRIES LTD
U96.SI
Sembcorp Industries - All For Utilities
- Sembcorp Industries’ utilities business would be its main earnings driver, with a visible pipeline of project deliveries unt il FY18.
- We think the current weakness in its marine business would be partially cushioned by its utilities segment.
- Maintain BUY and SOP-based TP of SGD4.00 (45% upside).
- On a standalone basis, NPV for its utilities business stands at SGD2.98.
Utilities to be the main driver.
- Sembcorp Industries is expected to deliver four utilities projects In FY16, namely a power plant in India, waste-to-energy facilities in the UK and Singapore, as well as an integrated water management project in China.
- In FY17, the company is expected to deliver a 1.3GW power plant in China and a 225MW plant in Myanmar.
Marine segment still challenging.
- Net orderbook for its marine business stands at SGD9.7bn, of which c.70% comprises drilling vessels.
- Sembcorp Marine (SMM SP, NEUTRAL, TP: SGD1.51) has managed to secure SGD60m worth of new orders YTD.
Urban development chugging along.
- Sembcorp Industries’ net orderbook for urban development stood at 236ha as at Mar 2016, of which 81% is composed of industrial and business development, while the remainder is expected to be developed into commercial and residential areas.
Maintain BUY and SGD4.00 TP.
- We maintain our BUY call on Sembcorp Industries with our SOP-based TP unchanged at SGD4.00.
- Its pipeline of utilities projects would be driving its earnings going forward, partially cushioning the current weakness in its marine business.
- The key risk to our call would be lower-than-expected new orderbook wins .
Singapore Research
RHB Invest
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http://www.rhbinvest.com.sg/
2016-05-05
RHB Invest
SGX Stock
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