Sembcorp Industries: Strong results from utilities biz, 2Q Rev at $2.2b +1.4% yoy +8.1% qoq with net profit $175.1m +8.6% yoy +9.5% qoq. Net profit from Marine fell 8% yoy to $183m partly due to timing recognition but was offset by strong Utilities segment with net profit up 17% yoy.
Utilities approx 58% share of rev was up 31% yoy (after integration of Env Mgmt) attributed to rev from High Sulphur Fuel Oil which was indexed to higher prices. Growth in Utilities is expected with 2nd tranche of gas from West Natuna to contribute to rev in 4Q11, Salalah project in 2012 and Jurong Island in 2013.
For Industrial Parks co has remaining saleable land of 2.4k hectares which at $50/hectare, implies potential sales of $1.2b. Deutsche maintains Buy with TP$7.20, with utility business trading at 4.0x P/E vs hist avg of 8.0x and global peers at 13-16x, with P/B of Sembcorp Ind at 0.5x. BNP maintains Buy with TP$5.85.
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