Sembcorp Industries

Sembcorp Industries: SCB initiates Coverage with O/p Call and $5.90 TP. House expect a healthy 2013 for the offshore industry based on the latest data points, which underpins its projected book-to-bill ratio of 1x over the next two yrs. Combined with its record backlog worth > $13b For grp’s utilities business, expect SCI’s energy and water capacity to increase 19-37% by end-2015 and tip higher capacity to drive 13% YoY growth in utilities EPS in FY14, after a 3% fall in FY13. While concerns regarding margin pressure from upcoming capacity in SG’ss energy sector remain, believe EPS estimates are conservative, with potential to surprise positively.