No clear catalysts yet
- 2Q15 missed mainly on weak Marine earnings. Interim DPS maintained at SGD 5.0 cts.
- Singapore operations still pressured. Overseas contribution insufficient to arrest declining Marine contribution.
- Cut FY15-17E by 6-10% on lower Marine and Utilities forecasts. SOTP TP drops from SGD4.00 to SGD3.60. Maintain HOLD on 4.3% dividend yield.
What’s New
- 2Q15 PATMI of SGD223.6m (+24.9% YoY, +57.2% QoQ) was bolstered by an expected SGD54.7m gain from divestment of Sembcorp Bournemouth Water in the UK. Core PATMI missed expectations, mainly due to poor Marine performance.
- 1H15 headline PATMI of SGD365.8m (+0.5% YoY) formed 46/49% of our/consensus FY15E. Core Utilities net profit in 2Q15 rose 16% QoQ. But Singapore segment continues to face pricing pressure, with 1H15 segment net profit dropping 62% YoY to SGD25.1m.
- For new assets that contributed in 2Q15, India’s TPCIL recorded a SGD9m loss, attributed to initial startup cost, while Sembcorp Green Infra (SGI) delivered SGD4m of profits.
- Interim DPS maintained at SGD 5.0 cts.
What’s Our View
- Management said that power prices in Singapore remain volatile and hard to predict. There may be further pressure when Hyflux’s 410MW Tuaspring Power Plant is commissioned in 2H15.
- In India, unit 2 of TPCIL should be operational by 3Q15, adding another 660MW.
- SCI expects to see profits in 2H15 when operations are ramped up. It would add another 1,320MW power capacity from neighbouring NCCPP project in 2016.
- We cut FY15-17E EPS by 6-10% to factor in lowered Marine forecasts while also trimming our Utilities forecasts.
- SOTP TP drops from SGD4.00 to SGD3.60. Stronger growth in Utilities from overseas assets could only come in 2016 but may be insufficient to arrest declining Marine performance. But a 4.3% dividend yield should provide support for share price.
- Maintain HOLD.
Analyst: Yeak Chee Keong, CFA
Source: http://www.maybank-ke.com.sg/
