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Author: kimeng   |   Latest post: Fri, 15 Nov 2019, 2:29 PM

 

Sembcorp Industries: Decent Set of 4Q Results

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Sembcorp Industries (SCI) saw a 7% YoY rise in revenue to S$2.6b and a 10% decrease in net profit to S$106m in 4Q18, bringing full year net profit to S$347m, which was higher than ours (S$311m) and the street’s (S$314m) full year estimates.

Turnover from the utilities business was 13% higher in 4Q, due to higher revenue in Singapore (which benefitted from higher High Sulphur Fuel Oil price), higher volume and prices for India, higher generation from Teesside and contribution from UK Power Reserve which was acquired in 2Q18. There was also better performance by Marine.

For 4Q, utilities contributed net profit of S$65m, while urban development turned in S$33m; marine contributed S$1m. Looking ahead, management mentioned that the utilities business is expected to deliver a steady performance in 2019, while the O&M sector remains in a down cycle.

Urban development’s earnings growth, however, is expected to continue this year. Pending an analyst briefing, we maintain our BUY rating but put our fair value estimate of S$3.30 under review.

Source: OCBC Research - 21 Feb 2019

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Labels: Sembcorp Ind

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