SCI

SCI: 3Q12 results; all segments performed except Marine. Group net profit declined 19% yoy to $181m, due mainly to a 48% yoy decline in Marine earnings, which was partly offset by a 27% increase in Utilities earnings. Utilities delivered strong results, with 9M12 net income growing 36% yoy, to $294m, accounting for 52% of group net profit. Strength came largely from Singapore, which was up 49^ yoy to $199m, on additional gas sales and high power spreads. ASEAN, Australia, India, Middle East, Africa and the Americas experienced earnings growth. China was slightly flat in 3Q12, but mgt expects a better 4Q12 due to contributions from its new wind assets. UK operations were weak, due largely to maintenance of Wilton 10 and deferment of carbon sales. Deutsche keeps at Buy, but lowers TP to $6.35 from $6.80, due to lowered SMM forecasts. Nevertheless, notes SCI’s recent share price weakness has been due largely to weakness from SMM (Hold, TP $4.90). At current prices, Utilities is trading at an attractive implied fwd PE of 6.7x, 49% below that of the regional utility peers at 13.2x. Notes prospects are healthy, with the following upcoming projects – Woodchip Boiler 2 (2Q13), Banyan Cogen, and a multu-utilities facilty (4Q13), Andhra Pradesh Plant (1H14) and a desalination plant in Fujairah (2H14). Maybank KE also keeps at Buy but lowers TP to $6.30 from $6.40.