Sembcorp Industries - Steadily expands overseas operations
- Sembcorp Industries recently announced that its power plant in Chongqing has commenced full commercial operation following the completion of its second 660MW unit; the first unit was completed in Nov 2016.
- According to SCI, the S$966.5m power plant is one of the most efficient power plants in Chongqing. It was developed by a 49:51 JV between a subsidiary of SCI and a subsidiary of Chongqing Energy Investment Group, which is owned by the Chongqing municipal government.
- Having invested in China for over two decades, SCI’s presence now spans 15 provincial regions, and we remain positive over the company’s longterm prospects.
- Meanwhile, the stock is already up 12% YTD vs the STI’s 6% appreciation over the same period, and is now close to our fair value estimate of S$3.36. It also closed at S$3.27 on 24 Jan, which was a 52-week high.
- Post Keppel’s FY16 results which saw significant impairments, there could be a dampening of sentiment on oil-related plays, barring positive surprises in the oil price.
- We maintain our BUY rating on SCI on a longer term basis, with dips presenting opportunities to accumulate.