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| Weekend Comment Feb 25: Sembcorp powers ahead |
Tags:
Sembcorp Industries |
Sembcorp Marine
| Written by Kang Wan Chern |
| Friday, 25 February 2011 23:26 |
| Article Index |
| Weekend Comment Feb 25: Sembcorp powers ahead |
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TAN KIN FEI, CEO of utilities service provider and rig builder Sembcorp Industries, was given a relatively easy time during the company’s FY2010 results briefing on Feb 25. Despite mounting investor concern arising from the uncertainty in Africa and the Middle East, analysts and reporters present had no questions for him on how this would affect Sembcorp’s assets and operations in the region.
Sembcorp actually owns 60% of the US$1 billion ($1.27 billion) Salalah independent water and power plant (IWPP) in Oman, expected to be completed by 1H2012. A 15-year contract to supply water and power to the Omani government has already been secured. The company also owns a 40% stake in the US$1.7 billion Fujairah IWPP in the United Arab Emirates which is expected to be fully completed by 2013 but already supplies water and power on a fixed-price basis.
Analysts had earlier cautioned that any regime change could result in a loss of control of the IWPPs and affect group earnings, concerns Tang tried to address during the briefing. “Recent events in the Middle East and North Africa could create uncertainties and threaten global economic recovery,” he says, quickly adding that its projects in the region, Oman and the UAE have so far not been affected by the unrest. Still, he says Sembcorp will “continue to closely monitor the situation in the region” and expects its utilities and industrial parks businesses to continue delivering “a steady performance” in the coming year.
STRATEGY THAT WORKS
For the 12 months ended Dec 31, 2010, Sembcorp reported a 16% yoy rise in net profit to $793 million despite a 8% dip in revenue to $8.76 billion. During the period, profits earned at Sembcorp’s businesses in the Middle East and Africa grew by 80% yoy.
“We have once again achieved a good year in terms of growth in both our energy and water businesses,” Tang says. “Our Salalah project is on target to commence in July this year and we have also announced a new wastewater treatment plant, co-gen plant and multi-utilities centre to support our customers like Lanxess and JAC Aromatics Corp on Jurong Island.” Sembcorp is investing some $840 million to build the facilities.
Meanwhile, the company is seeing progress at its 49%-owned, $1.9 billion coal-fired power plant in Andhra Pradesh, India. On Feb 23, it announced that the green light had been given to contractors to begin engineering and construction work on the plant. It also announced that construction of its second co-generation plant on Jurong Island is on target to commence later this year.
“Because of this rapid growth we have increased our power generation capabilities from 3,800 MW to 5,800 MW and we are now able to produce 6 million tonnes of water to serve over 5 million people,” Tang adds.
FLAGSHIP UNIT
However, Sembcorp Marine, the company’s 61.3%-owned rig-building and ship-repair arm, still contributes the lion share of Sembcorp’s earnings for the year. During the period, SembMarine’s net profit stood at $492.8 million, up 15% yoy and contributing to about 62% of the company’s total profit. The improved earnings was due to margins recognised from the sale of a CJ70 harsh environment jack-up rig as well as the execution of repeat rig orders for customers during the year.
In contrast, earnings from the utilities business grew by just 2% to $147.3 million over the same period, as power and water generation plants typically have gestation periods of between three to seven years before they begin contributing to earnings.
Shares of SembMarine have risen 0.9% since its results were announced on Feb 23, closing at $5.26 each on Friday. Meanwhile, Sembcorp’s shares closed at $4.90 apiece, up 1.4% for the week.
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| Sembcorp posts 11.7% fall in 4Q net profit to $229m |
Tags:
Sembcorp Industries
| Written by The Edge |
| Friday, 25 February 2011 17:16 |
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Sembcorp Industries reporting a 16% growth in net profit attributable to shareholders of the company (net profit) for the full year 2010 (FY2010) of $792.9 million compared to $682.7 million in FY2009. Turnover was $8.8 billion in FY2010 compared to $9.6 billion in FY2009.
In FY2010, Marine’s contribution to group net profit grew 15% from $430.2 million to $492.8 million, while Utilities’ net profit increased 2% from $226.7 million to $231.3 million. Industrial Parks’ net profit improved 30% from $28.3 million to $36.9 million.
In the fourth quarter of 2010 (4Q2010), group net profit was $228.7 million compared to $259.0 million the previous year. In 4Q2010, profit contribution from the Marine business was lower due to the resumption of margin recognition for some of its projects upon securing buyers in 4Q2009, while the Utilities business was affected by the one-off write-down of certain ageing assets in the UK during the quarter. 4Q2010 turnover was $2.1 billion compared to $2.4 billion in 4Q2009.
The board of directors is proposing a final tax exempt one-tier dividend of 17 cents per ordinary share comprising an ordinary dividend of 15.0 cents and a bonus dividend of 2 cents per ordinary share for 2010.
Sembcorp says its Marine business has a current net orderbook of $4.8 billion (2009: $5.5 billion) with completions and deliveries stretching till second quarter of 2013. Enquiries have improved though competition remains keen.
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SINGAPORE : Sembcorp Industries has booked a net profit of S$228.7 million for its-fourth quarter ended December 2010.
This is a near-12 per cent drop compared with S$259 million one year ago.
Despite the fall, net profit exceeded analysts' expectations of S$165.7 million.
It was a lacklustre fourth quarter for Sembcorp Industries, which owns a 61 per cent stake in its rig building business Sembcorp Marine.
Almost all business segments of the company reported a lower net profit.
Net profit for its Utilities business fell 18 per cent to S$54.4 million.
For Sembcorp Marine, it posted a 20 per cent drop in net profit to S$145.8 million.
But its Industrial Parks business saw a 47 per cent jump to S$19.4 million.
" Other Businesses" saw a 40 per cent drop in net profit to S$5.4 million.
Sembcorp Industries said its oil rig business Sembcorp Marine accounted for the fall in net profit.
Its utilities operations in the UK were also hurt by a one-time write down of its assets and customer closures, as well as low power prices, which all contributed to the fall in net profit.
On the upside, some of its British facilities have been bought over by Lotte Chemical from Korea.
But analysts are cautiously optimistic about Sembcorp Industries' performance going forward.
Lim Siew Khee, vice president of research at CIMB, said: " I would be watchful over utilities in the UK because they need the customers to fill in their gap of volume dispatch and power prices, if they continue to be low, that would actually impact the UK earnings.
" (For) marine...we need more orders to sustain the momentum, but overall I think I do not see a high uncontrolled risk for Sembcorp industries."
Sembcorp Industries' operations in the Middle East are unlikely to be affected from the ongoing political unrest in the region.
It has water systems in Oman as well as in the United Arab Emirates (UAE).
Tang Kin Fei, chief executive officer of Sembcorp Industries, said: " If you look at our business, we are providing essential services to people, and we are confident that in a difficult situation, in all situations, whether you are in a feast or famine, people still need to use power, and they still need to use water.
" In Oman and in UAE, they are in more stable parts of the Middle East, and although we have no problem right now, we will continue to monitor the situation very closely."
Looking ahead, analysts said Sembcorp Industries should benefit from Sembcorp Marine's order book.
Sembcorp Marine has an order book worth S$4.8 billion.
On a full-year basis, Sembcorp Industries' net profit rose by 16 per cent to S$792.9 million.
- CNA/ms
Sembcorp Industries Limited announced that it has signed an Engineering, Procurement and Construction (EPC) contract with Alstom Power Singapore and Alstom ( Switzerland ) for the development of Sembcorp’s second cogeneration plant on Jurong Island in Singapore . Construction for the project is expected to commence in the second half of 2011 and the plant’s first phase is expected to be operational by the second half of 2013. The combined-cycle gas turbine cogeneration plant will have an eventual capacity of 800 megawatts of power and 400 tonnes per hour of process steam, roughly doubling Sembcorp’s total power capacity in Singapore to 1,615 megawatts, up from the current 815 megawatts. With an EPC contract value of approximately S$900 million for its entire planned capacity, this new cogeneration project is expected to be funded through a mix of bank borrowings and internal sources
bad news.
vonntan ( Date: 23-Feb-2011 21:59) Posted:
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DJ Sembcorp Industries Awards Around S$900 Mln Contract To Alstom Units
SINGAPORE (Dow Jones)--Sembcorp Industries Ltd. (U96.SG) said Tuesday that it has awarded an engineering, procurement and construction contract worth about S$900 million to units of Alstom S.A. (ALO.FR) to build a cogeneration power plant for the Singapore company.
Under the contract, Alstom Power Singapore and Alstom (Switzerland), will build the plant's entire planned capacity of 800 megawatts, with the first phase to provide 400 megawatts, Sembcorp Industries said in a statement.
The facility at Singapore's Jurong island will operate under a generation licence granted to Sembcorp by the Energy Market Authority and will be fuelled by piped natural gas as well as liquefied natural gas, for which Sembcorp has signed a long-term LNG supply agreement with BG Singapore.
Construction is expected to start in the second half of 2011, with the plant's first phase due to be operational by the second half of 2013, Sembcorp said.
-By Chun Han Wong Dow Jones Newswires +65 64154 160 chunhan.wong@dowjones.com
CIMB 11 Feb 11
Sembcorp Industries (SCI SP S$5.01) – SELL
FY12P/E: 13.0x, P/BV: 1.9x
• The stock tested the upper band of its uptrend channel at S$5.32 but the bulls
could not push prices through the channel resistance. Prices appear to have
reversed after it fell below the wedge support yesterday on rising volume.
Prices also closed below its 50-day SMA.
• With its MACD and RSI continue to sport negative divergences, we would not
be surprised if prices continued to work its way lower towards S$4.93, followed
by S$4.78 and S$4.64.
• We are now bearish on this stock. Short now with a stop placed above S$5.30.
Sembcorp Ind (SCI) has been prequalified to bid for Oman’s biggest Greenfield power plant dev, a 2k MW independent power plant project in Sur. It is among 6 bidders to make the initial cut which saw a total of 29 multinational cos cut to 6. Known bidders include Mitsui and Marubeni from Japan and Germany’s Siemens.
Co has 2 other projects in the region, a US$1.0b Salalah independent water and power project (IWPP) and a US$1.7b Fujairah IWPP in Abu Dhabi. The Sur project at 2k MW, will dwarf both Salalah (445 MW) and Fujairah (760 MW), if won by co. Contributions from overseas currently forms over 40% of SCI’s utilities rev.
If won, project is expected to add to rev in mid-2013 when first phase is completed. SCI trades at trailing P/E of 11.2x close to hist avg of 11.1x and 13.0x fwd 2011 P/E.
5.01 is our pivot point.
Our preference: as long as 5.01 is support look for 5.54.
Alternative scenario: the downside breakout of 5.01 would call for 4.89 and 4.82.
Comment: the RSI is above its neutrality area at 50. The MACD is positive and below its signal line. The stock could retrace in the short term. Moreover,the stock is above its 20 and 50 day MA (standing respectively at 5.14 and 5.05). Sembcorp Industries is currently trading near its 52 week high reached at 5.32 on 27/01/11.
Supports and resistances: 5.61 *5.54 **5.46 5.24 last 5.05 5.01 **4.89 *
// TRADING CENTRAL is a commentary service specialising in technical analysis //
IIFL recommends BUY with Target Price at $6.76
Sembcorp Industries is like an SUV with a soft suspension: its
dominating subsidiary Sembcorp Marine is cyclical and bumpy by
nature, yet its utilities business, with relatively stable earnings,
smooths its ride. We expect 9-10% annual earnings growth for
utilities, driven by asset additions, and a strong 28% earnings
rebound for Sembcorp Marine in 2012, driven by a renewed rigbuilding
cycle. Our sum-of-the-parts valuation suggests a target
price of S$6.76. We initiate coverage with BUY.
Utilities’ steady footprints: The utilities business is asset dependent.
Sembcorp Industries has been steadily adding global assets. It acquired
the global water services firm Cascal in 2010, opened up Singapore’s
largest NEWater plant, and scored two major concessions in the Middle
East. Based on its current project schedule, we expect 9-10% earnings
growth in the utilities business annually in the next three years.
Leading a renewed building cycle: Sembcorp Marine led a surprising
revival of new-build jack-up rigs in 2H2010, pocketing seven orders plus
options for eleven more. We see strong rebound in rig operators’
investment sentiment, fuelled by the uptick in oil price, and expect
Sembcorp Marine to consolidate its lead in jack-up rigs, with 11 new
orders in 2011, plus three semi-subs. Total order intake will push
earnings up by 28% and 30% in 2012 and 2013, respectively.
Moderated earnings volatility: Group core earnings are dominated by
Sembcorp Marine (63% in 2009). Yet stable earnings from utilities offset
the cyclicality of Sembcorp Marine. We expect -3%, 19% and 21% group
earnings growth in 2011, 2012 and 2013, respectively, compared to
Sembcorp Marine’s -7%, 28% and 30% for the same period.
Under-priced: Our sum-of-the-parts valuation targets 12x FY11ii forward
P/E for the utilities business, and 18x FY11ii forward P/E plus residual
cash for Sembcorp Marine. We arrive at a target price of S$6.76, which
implies an effective FY11ii forward P/E of 16.7x for the group, and 33%
upside on its current price. This upside is bigger than the upside that we
suggest for Sembcorp Marine (30%). We initiate coverage with BUY.
Life Is Great
Our pivot point is at 5.19.
Our preference: target 4.83.
Alternative scenario: the upside breakout of 5.19 would call for 5.3 and 5.37.
Comment: the RSI is below 50. The MACD is positive and below its signal line.The MACD must penetrate its zero line to expect further downside. Moreover,the stock is trading under its 20 day MA (5.11) but above its 50 day MA(5.01). Sembcorp Industries is currently trading near its 52 week high reached at 5.24 on 06/01/11.
Supports and resistances: 5.3 *5.19 **5.15 5.08 last 4.89 4.83 **4.76 *
// TRADING CENTRAL is a commentary service specialising in technical analysis //
// fyi, utilities play usually are low beta stock //
5.01 is our pivot point.
Our preference: as long as 5.01 is support look for 5.37.
Alternative scenario: the downside breakout of 5.01 would call for 4.89 and 4.81.
Comment: the RSI is above 50. The MACD is positive and below its signal line. The stock could retrace in the short term. Moreover, the stock is trading above both its 20 and 50 day MA (standing respectively at 5.08 and 4.96). Sembcorp Industries is currently trading near its 52 week high reached at 5.24 on 06/01/11.
Supports and resistances: 5.44 *5.37 **5.29 5.12 last 5.06 5.01 **4.89 *
// TRADING CENTRAL is a commentary service specialising in technical analysis. //
Hulumas.... where is our $5.90?!?!?!?!??!
SGG_SGG ( Date: 30-Dec-2010 12:08) Posted:
Hulumas ( Date: 21-Dec-2010 14:28) Posted:
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Hope this fella move back above 5.20!
Hulumas ( Date: 21-Dec-2010 14:28) Posted:
Me too!
SGG_SGG ( Date: 20-Dec-2010 20:35) Posted:
5.90  ....... ...... ....... I want!!!!!!!!!
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Our pivot point is at 4.96.Our preference: the upside prevails as long as 4.96 is support.Alternative scenario: the downside breakout of 4.96 would call for 4.8 and4.7.Comment: the RSI is trading above 70. This could mean that either the stock is in a lasting uptrend or just overbought and that therefore a correction could shape (look for bearish divergence in this case). The MACD is positive and above its signal line. The configuration is positive. Moreover, the stock is above its 20 and 50 day MA (standing respectively at 5.04 and 4.87).
SembcorpIndustries is currently trading near its 52 week high reached at 5.2 on09/12/10.
Supports and resistances: 5.51 *5.41 **5.31 5.14 last 5.02 4.96 **4.8 *
//TRADING CENTRAL is a commentary service specialising in technical analysis.//
Me too!
SGG_SGG ( Date: 20-Dec-2010 20:35) Posted:
| 5.90 ....... ...... ....... I want!!!!!!!!!
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5.90
....... ...... ....... I want!!!!!!!!!
Phillip Secs Maintain buy recommendation and raise fair value from S$5.85 to S$5.90
We like Sembcorp Industries and expect the company to perform well for the next three years.
Its subsidiary, Sembcorp Marine, continues to clinch orders for jack-up rigs and we think that
there will be more contracts next year. This is because crude oil prices have remained firm and
greater oil exploration and production expenditure by oil companies is likely in 2011.
Furthermore, Sembcorp Industries has continued to grow its utilities segment with projects in
different parts of the world through the acquisition of Cascal. As a result, we have a buy
recommendation. We have also raised its fair value from S$5.85 to S$5.90 because the market
price of Gallant, in which it owns a 23.9% stake, has increased recently.
Life Is Great
