Sembcorp Industries

Sembcorp Industries: DBS Vickers sees earnings upside for SCI's utilities business if the maintenance shutdown of its Jurong Island cogen plant is shorter than expected, the power spread stays consistently high and/or acquisitions show profit accretion. House notes 1Q12 results were in-line with its expectations, up 11% yoy to $176.7m, with the utilities contributing 56% of net profit or $99m, topping its forecast of $80m as both sales and margins outperformed. But marine earnings fell 25% to $68.7m on slower orderbook recognition and lower margins. Highlights SCI remains a good proxy to the cyclical O&G recovery with an added kicker from a growing utilities business, which is still undervalued at less than 6x FY13 P/E vs historical average of 8-9x. Keeps a Buy call with $6.00 target. The stock is up 2.8% to $4.80.