Excerpts from UOB Kay Hian report

Sembcorp Industries- 4Q15: No privatisation of Sembcorp Marine on the cards.

(SCI SP/BUY/S$2.53/Target: S$3.80)
FY16F PE (x): 8.6 FY17F PE (x): 7.7

Privatisation of SMM is highly unlikely. In response to a pointed question on rumours of privatisation of Sembcorp Marine (SMM), Sembcorp Industries’ (SCI) management answered candidly that:

a) whatever decision it makes, it has to be “accretive to SCI shareholders...and this is important” and,
b) that SCI already has “a 61% stake in SMM...and should reserve its money to grow other businesses that give a higher yield”.

This is in view of an expected prolonged downturn in the marine business. Increase 2016/2017 core net profit forecasts by -2 to +4%.

We tweak our 2016/2017 net profit forecasts to S$528m (-2%)/S$590m (+4%) respectively, adjusting for divestments and a higher PLF assumption for TPCIL. 

We introduce our 2018 earnings estimate of S$664m.

Maintain BUY and raise target price from S$3.47 to S$3.80. We roll our target price forward, assuming 12x PE for the Utilities business.

Barring unforeseen circumstances, the India power plants are primed to drive strong earnings growth. Maintain BUY on valuation grounds.


Credit Suisse report says: 

"Management noted that any potential transaction involving Marine must be accretive to SCI's shareholders. It was noted that the near-term outlook for the oil and gas industry remains unclear, and there are ample investment opportunities outside of Marine. 

"We maintain our OUTPERFORM rating as we believe the current share price has not captured strong utilities earnings growth prospects from start-up of India power assets. We lower our 2016- 17E EPS by 21-22% and target price to S$3.00 (from S$4.20) due to lower marine estimates."

You may also be interested in:

You have no rights to post comments

Counter NameLastChange
AEM Holdings2.650-0.080
Avi-Tech Electronics0.265-
Best World1.700-0.120
Broadway Ind0.087-0.002
China Sunsine0.385-
Delfi Limited0.955-0.075
Food Empire1.430-0.020
Fortress Minerals0.2700.005
Geo Energy Res0.335-0.055
GSS Energy0.027-0.002
Hong Leong Finance2.480-0.010
Hongkong Land (USD)3.2800.020
ISDN Holdings0.330-0.010
IX Biopharma0.041-
Jiutian Chemical0.025-
KSH Holdings0.250-
Leader Env0.052-
Medtecs Intl0.133-0.001
Nordic Group0.340-0.010
Oxley Holdings0.0910.001
REX International0.1230.002
Sinostar PEC0.1420.004
Southern Alliance Mining0.600-
Straco Corp.0.515-
Sunpower Group0.2250.005
The Trendlines0.083-0.001
Totm Technologies0.024-0.001
Uni-Asia Group0.8500.010
Wilmar Intl3.340-0.020
Yangzijiang Shipbldg1.7400.070

We have 2174 guests and no members online

rss_2 NextInsight - Latest News