Sembcorp Industries - OCBC Investment 2021-02-26: Waiting For Details On Portfolio Transformation

SEMBCORP INDUSTRIES LTD (SGX:U96) | SGinvestors.io SEMBCORP INDUSTRIES LTD (SGX:U96)

Sembcorp Industries - Waiting For Details On Portfolio Transformation

  • Sembcorp Industries (SGX:U96) reported core net profit of S$301m in FY20; net loss of S$997m including discontinued business and exceptional items.
  • Utilities to see changes in customer profile in the UK and Singapore.
  • Transforming portfolio to include more sustainable solutions; details later in May.



Sembcorp's price action since last report



Core net profit of S$301m in FY20; net loss of S$997m including Marine and exceptional items

  • In its FY20 results, Sembcorp Industries's revenue fell 19% to S$5.4b while net profit (excluding exceptional items and the discontinued Marine business) was S$301m, compared to S$456m in FY19.
  • Including the Marine business and exceptional items (~S$144m), Sembcorp Industries recorded a net loss of S$997m for FY20, compared to a profit of S$247m in FY19. This was mainly due to a non-cash, non-recurring fair value loss of S$970m following the completion of the distribution in specie of shares of Sembcorp Marine (SGX:S51) in September 2020 and a net loss of S$184m from the Marine business prior to the distribution.


Not expecting a significant recovery in utilities yet

  • As mentioned in our earlier report, even before COVID-19, Sembcorp Industries's utilities business in certain countries was already relatively soft, such as in India and the UK due to individual industry-specific factors. Excluding exceptional items, net profit for the Energy business was S$297m compared to S$360m in FY19.
  • Looking ahead, Sembcorp Industries will also be impacted by changes in customer profile in the UK and Singapore, as well as the loss of income from divested assets in Panama and Chile.

Focusing on sustainable solutions; details to be out later in May






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-02-26
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.85 UP 1.630



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