- 1Q15 missed. Weak on all fronts. Cut FY15-17 by 5-9%.
- India TPCIL ramp-up slower than expected. New Myanmar power plant to contribute only from 2017.
- SOTP TP drops from SGD4.16 to SGD4.05. Maintain HOLD for lack of catalysts.
1Q15 PATMI of SGD142.2m (-23.1% YoY, +40.9% QoQ) missed, at only 17%/18% of our/market’s FY15. Marine disappointed on weak ship repair, as already indicated by SMM’s results on 28 Apr. Intense competition in the power market lopped 42% YoY off Singapore utilities’ net profit, to SGD30.9m. TPCIL did not contribute in 1Q15. Its recently-acquired wind-power asset, Green Infra, in fact booked a SGD1.6m loss from the low wind season which occurs in Oct-Apr. Management said Green Infra usually delivers 75% of its earnings during the high wind season. SCI also suffered from higher depreciation charges for these new assets.
No catalysts yet
We expect Singapore power plants’ as spark spreads slipped further in 1Q15. TPCIL’s ramp-up in India was also slower than expected. While its first 660MW unit was hooked up with the grid in 1Q15, it was shut for rectification work and restarted only on 11 Apr. TPCIL’s unit 2 will be commissioned at end-3Q15 but may take several months to rev up. We see contributions only from 2016. Elsewhere, SCI will be developing and operating a USD300m, 225MW gas-fired power plant in Myanmar. But commercial operations will only commence in 2017. We cut FY15-17 EPS by 5-9% as we factor in weaker Marine and Singapore Utilities. We also account for a SGD50m divestment gain related to Sembcorp Bournemouth Water in the UK in 2Q15. Our SOTP TP drops from SGD4.16 to SGD4.05. Expect any positive catalysts from overseas projects only from 2016. Maintain HOLD.
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