Sembcorp Industries - OCBC Investment 2016-03-14: Up 38% since 21 Jan 2016 low of S$2.19

Sembcorp Industries - OCBC Investment 2016-03-14: Up 38% since 21 Jan 2016 low of S$2.19  SEMBCORP INDUSTRIES LTD U96.SI 

Sembcorp Industries: Up 38% since 21 Jan 2016 low of S$2.19 

  • Since our 29 Jan 2016 sector report in which we highlighted the undervaluation of Sembcorp Industries’ (SCI) utilities segment, its share price has appreciated by 35%, compared to the STI’s 10% gain over the same period. 
  • In Jan, fear of an SMM privatisation by SCI was at its peak, and that weighed on SCI’s share price. 
  • As the market was later reminded that a rescue of Sembcorp Marine (if required) could take the form of several kinds of structures, and also by different players, (in which timing and pricing are both unknowns, no less), investors took the opportunity to buy up beaten-down SCI shares. 
  • We remain positive on the group’s long-term prospects for the utilities segment, and maintain our BUY rating on SCI with S$3.21 fair value estimate, though the shares could take a breather in the near term given its recent good performance. 



Low Pei Han CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-03-14
OCBC Securities Analyst Report BUY Maintain BUY 3.21 Same 3.21


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