HSBC thinks SembCorp Industries (SCI) is significantly undervalued with utlities stub valuations of 4.3x forward P/E, close to a decade low. The bank feels that SCI has been unjustifiably punished for the woes of its Marine business as even though the marine business is seeing deteriorating outlook, SCI's utilities business as continued to improve with the announcement of several new projects in 2015.
Significantly, the bank notes that at current valuations, the market is valueing SCI's marine business at zero if its utilities business is valued at peer multiples.
The bank reiterates its Buy rating but cuts its TP to $3 from $4.32 on the back of cuts to SCI's marine business estimates.
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