Post Reply
1-3 of 3
CIMB - SembCorp Industries (S$5.70) - 3QFY07 results - Full-year core in line
Largely in line. 3Q07 core earnings of S$116.1m (+51% yoy) were largely in line with our expectations. 9M07 net earnings of S$374m account for 74% of our FY07 estimate. Utilities and Marine made up 95% of 3Q07 turnover.
Slower quarter for Utilities, with a net profit of S$56.3m (-17% yoy). Excluding SMOE (divested to SembMarine), net earnings dipped 3% to S$55.3m due to lower spark spreads from weaker forward electricity prices and the scheduled overhaul of a boiler in the UK. However, Singapore operations remained strong despite no new customers in 3Q07. China, Vietnam and Fujairah operations were within management expectations.
Enviro stalled by asset-impairment provision. Enviro booked an unexpected loss of S$0.4m in 3Q07 from a profit of S$3.7m in 2Q07. The loss stemmed from an assetimpairment provision of some S$4m for its 50:50 China JV, Chunxing Alloy Group, that specialises in the recovery and sale of used lead acid batteries for the automotive industry. The outlook for this business looks gloomy due to industry-wide price hikes in raw materials, stricter environmental regulations and the abolition of a tax rebate (13%) for Chinese exports of lead acid car batteries. While no further provisions are likely for Chunxing in 4Q07, we remain cautious on other China JVs/associates which could be facing stiff competition or a changing business landscape.
Marred by Marine forex losses. Earnings contributions from Marine grew 87% yoy to S$51m but the performance was marred by US$330m of potential losses from unauthorised forex transactions. Nothing new was shared by SCI and management remains mum due to pending litigation and investigations
Maintain Outperform; target price raised to S$7.11 based on sum-of-the-parts. Our earnings estimates have been trimmed by 1-3% for FY07-09 to reflect slower growth in the Enviro and Utilities divisions, offset by stronger associate contributions and Industrial Parks. We also rolled forward our valuation basis for Enviro and Industrial Parks to CY09 while lowering our target P/E for Enviro from 10x to 9x. After the above adjustments, our target price has been raised from S$7.00 to S$7.11. Maintain Outperform as the operational outlook for Marine and Utilities remains strong.
SINGAPORE, Nov 6 (Reuters) - Singapore conglomerate SembCorp Industries Ltd
SembCorp, 49-percent owned by state investor Temasek Holdings [TEM.UL], said in a statement that it expects the utilities, environment and industrial park units to perform better in 2007 than last year.
"Marine's contribution to the Group's PATMI will depend on the outcome of the investigation and resolution with the banks on the foreign exchange exposure relating to the unauthorised foreign exchange transactions," said SembCorp Chief Executive Tang Kin Fei told a teleconference.
Its 61-percent owned ships and rig-builder SembCorp Marine
A lengthy legal process is expected as SembMarine said it will seek to recover $83 million already paid to one bank, and to dispute the $220 million owed to 11 others.
Tang said it was "not appropriate" to comment on the case and its financial impact while investigations are ongoing, but said: "If the provision is necessary, you can be assured that we will put it in." SembCorp said its July-September net profit hit S$116.14 million ($80.18 million), up from S$76.86 million a year earlier.
Full year 2007 net profit is seen at S$503.56 million, according to a consensus mean of 13 analysts in Reuters Estimates.
It said revenue for the three months was S$2.24 billion, up 36 percent from S$1.6 billion a year ago, and was S$6.1 billion for the nine months to September, during which marine and utilities contributed 51 percent and 43 percent respectively.
Asked about SembCorp's risk management policy, SembCorp Chief Financial Officer Lim Joke Mui said the company has "appropriate checks and balances in place", but refused to be drawn into discussing whether these are adequate to prevent a case like SembMarine's.
Shares in SembMarine have dipped 20 percent over two weeks since news of the forex losses broke on Oct 22, wiping off nearly $1.7 billion in market value.
SembCorp's stock price has also suffered, losing 10 percent over the same period, or $740 million of its market cap.
Despite the sell off, SembMarine's stock price is still up 86 percent in the year to date, while SempCorp is up 54 percent, outperforming the 23 percent rise in the broader Singapore market <.STI>.
Rig-builders like SembMarine, and market leader Keppel Corp
Profits at SembCorp's core utilities business, which supplies to industrial customers in Singapore, the United Kingdom, Asia and the Middle East, grew 24 percent over the first nine months of the year, the company said.
November 6, 2007
SEMBCORP POSTS 54% GROWTH IN 9M2007 PROFIT FROM CONTINUING OPERATIONS
- Group PATMI before EI increases 49% to $374.4 million
Sembcorp Industries (Sembcorp) continued to post strong earnings growth for the first nine months of 2007 (9M2007). The Group?s Profit After Tax and Minority Interest (PATMI) before Exceptional Items (EI) from its continuing operations showed an increase of 54% from the previous year, to $374.4 million. Turnover from its continuing operations was up 17% to $6.1 billion.
Strong business fundamentals continue to drive Sembcorp?s growth, backed by positive operating performance from its Utilities and Marine & Offshore Engineering businesses. Utilities? PATMI climbed 24% to $198.0 million, contributed mainly by its Singapore and UK operations. Meanwhile, Marine?s contribution to Group PATMI increased 81% to $149.5 million, due to robust growth from rig building, offshore & conversion and repair businesses. Net order book continues to stand at a strong $7.9 billion, with completion and deliveries till 2010. Contracts worth $5.1 billion have been secured to-date this year.
?Sembcorp?s business operations remain strong. Beyond this, we continue to strengthen our overseas beachheads through our UK biomass plant as well as through new projects in China. We also see new opportunities for growth in Singapore, with positive developments in the petrochemical sector bringing a wave of potential new downstream players onto Jurong Island,? commented Mr Tang Kin Fei, Group President & CEO.
Sembcorp?s FY2007 Outlook
The Group?s businesses remain sound and have continued to perform well. We expect 2007 PATMI contribution from Utilities, Enviro and Industrial Parks to be better than that of 2006 on a comparable basis, excluding net profits arising from exceptional items.
Marine?s contribution to the Group?s PATMI will depend on the outcome of the investigation and resolution with the banks on the foreign exchange exposure relating to the unauthorised foreign exchange transactions.
Highlights from Sembcorp?s 9M2007 Financial Results
- Strong earnings growth from continuing operations
- Turnover of $6.1bn, up 17%
- PATMI before EI of $374.4m, up 54%
- Group PATMI before EI at $374.4m, up 49%
- Healthy balance sheet
- Net gearing at 0.05x
- Interest cover at 16 times
- Return on Equity (annualised) at 17%
- Positive Economic Value Added at $294.9m
-END-
Issued by: Sembcorp Industries Ltd (Company Registration No. 199802418D)
For media & analysts? queries, kindly contact:
Aleve Co (Ms)
Assistant Manager
Group Corporate Relations
DID: +65 6723 3011
Email: aleve.co@sembcorp.com.sg
Fock Siu Ling (Ms)
PR Counsel
Group Corporate Relations
DID: +65 6723 3152
Email: fock.siuling@sembcorp.com.sg
About Sembcorp Industries
Sembcorp Industries Ltd is a leading utilities and marine group. The Group provides centralised utilities and energy to industrial customers in Singapore, the United Kingdom, Asia and the Middle East. It is a global leader in marine and offshore engineering and also a provider of industrial park and environmental management services in the region.
Sembcorp Industries has total assets of over $8.5 billion and employs more than 7,500 employees.
Listed on the main board of the Singapore Exchange, Sembcorp Industries is a component stock of the Straits Times Index and several MSCI indices.
Attachment SCI_9M07_Results_Slides.pdf
Attachment SCI_9M07_SGXNet.pdf