UOBKayhian on 7 May 2014
FY14F PE (x): 11.1
FY15F PE (x): 10.6
21% of our 2014 net profit forecast. Sembcorp Industries (SCI) reported a net profit of
S$185m (+5% yoy) for 1Q14. This was 21.4% of our 2014 forecast. The utilities
segment registered a 3% yoy increase in net profit to S$92m, primarily due to strong
performance in China (+33% yoy). Singapore’s flat utilities earnings were a
commendable performance, in view of competition from new power plants in the
industry. The lower utilities earnings contributions from the Middle East & Africa region
was due to SCI’s reduced stake in Salalah in Oman from 60% to 40%, following the
latter’s IPO in 4Q13. Maintain target price at S$5.95, pegged at 10% discount to our
sum-of-the-parts valuation. We value SCI’s utilities segment at 12x 2015F PE.
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