SembCorp Industries - Valuation attractive, offshore catalyst

Wednesday, June 10, 2009

SCI’s share of profits from Sembcorp Marine (SMM) rose S$18m on order book recognition. This more than offset a S$10m fall in utilities net profits. Utilities was broadly in line with expectations: the unit’s Singapore operations recorded an unexpected S$4.6m gain on sale of strategic fuel and S$5.7m deferred tax writeback, but these gains were offset by provisions which we estimate at about S$5m, made for an unscheduled plant maintenance in May.

We recently raised SMM order book assumptions by 17-80% as we expect contract awards to pick up in the coming months and we think the positive momentum could be sustained if global macro data continues to surprise positively. This could be a powerful share price driver for SMM, and in turn, SCI. Contracts: SMM has just announced a S$230m contract for an offshore gas platform and we believe a semisub completion job worth about US$250m is imminent.

Implied valuation of 6.2x 2010E EV/EBITDA on the core utilities business looks attractive, given the division’s relatively stable earnings outlook. An SMM share price rally is meaningful to SCI as SMM accounts for 46% of SCI’s valuation. Valuation: Sum of parts based price target raised to S$4.04 from S$3.25 The increase is due to higher market values of Sembcorp Marine and Gallant Venture. SCI’s utilities business is valued on DCF.


Click here for more Offshore Marine Stocks Technical Analysis

Sponsored Links



Related Posts by Categories



Posted by Top Ten Webs at 8:15 AM
Labels:

Comments

No response to “SembCorp Industries - Valuation attractive, offshore catalyst”
Post a Comment | Post Comments (Atom)

Post a Comment

Disclaimers

These articles are neither an offer nor the solicitation of an offer to sell or purchase any investment. Its contents are based on information obtained from sources believed to be reliable and we make no representation and accepts no responsibility or liability as to its completeness or accuracy. We share them here as they are very informative, we claim no rights to these articles. If you own these articles, and do not wish to share it here, please do inform us by putting a comment and we will remove them immediately. We do not have any intentions to infringe any copyrights of yours. This is a place to keep record on the analyst recommendation for our own future references. We hope this serves as a record in the future, also make them searchable. We bear no responsibility for any profit, loss generated from these reports.
 
Citrus Pink Blogger Theme Design By LawnyDesignz Powered by Blogger