• Sembcorp Industries’ 2Q18 slightly above boosted by urban development profit and strong India turnaround.
• India’s second power plant SGPL saw core losses narrowing to S$3m, from average of ~S$27m a quarter.
• Bidding for Hyflux’s Tuaspring asset?
• Reiterate BUY; Target Price lowered to S$3.90, largely to account for Sembcorp Marine’s lower Target Price.

Maintain BUY; Target Price Adjusted to S$3.90, Largely Due to Lower SMM Target Price

Sembcorp Industries (SCI) offers a unique value proposition as a proxy to ride the cyclical O&M upturn, and is supported by a defensive utilities business.

India operations recorded all-time high profits in 2Q18. We believe continuous improvement in India will re-rate Sembcorp Industries’ Utilities business, which is undervalued at 0.5x P/BV and 6x PE against 6.5% ROE.

Source: DBS Research - 06 Aug 2018