20180807-辉立证券-Sembcorp_Industries_Ltd__India_operation_turned_around_8页_705kb
报告摘要
Sembcorp Industries Ltd 2Q18 Summary
Core Content Overview
Sembcorp Industries Ltd, a Singapore-based conglomerate, reported its 2Q18 results, showcasing a mixed performance across its segments. The group's overall revenue and net profit met expectations, driven by strong contributions from its Utilities segment in Singapore, China, and India. However, the Marine segment continued to underperform, dragging down the group's profitability. The company also lowered its FY18e EPS forecast and adjusted its target price due to prolonged weak profitability from Sembcorp Marine (SMM).
Main Points
Positive Aspects
-
Utilities Segment Performance:
- Singapore: Net profit of S$43.3mn (+4.3% YoY), with the company securing 94MW of solar power capacity and becoming the second largest renewable energy player in Singapore.
- China: Net profit of S$15.1mn (+65.9% YoY), primarily due to the Changzhi water treatment plant and higher spark spread from the SongZao thermal power plant.
- India: Turned profitable with a net income of S$39.4mn (2Q17: S$-3.2mn), attributed to a high wind season and reduced loan balance, along with higher average power selling prices.
-
Valuation Adjustments:
- The company lowered its FY18e EPS from 18.9 SG cents to 17.7 SG cents due to prolonged weak profitability from SMM.
- The target price for SMM was reduced to SGD 1.78, based on the sum-of-the-parts method.
- The overall target price for Sembcorp Industries was adjusted to SGD 3.70 (from SGD 3.83).
Negative Aspects
-
Marine Segment Challenges:
- SMM reported a net loss of SGD 55.6mn in 2Q18.
- The net order book declined to SGD 7.2bn in 1H18 from SGD 8.4bn in FY17.
- Work volume and margins are expected to remain low for the rest of the financial year, with operating losses anticipated.
-
Concerns in India:
- Thermal coal prices imported from overseas are higher than domestic prices, compressing the spark spread.
- The group is concerned about receivables from power purchasers and plans to optimize the cash conversion cycle.
Outlook and Strategy
- Sembcorp Industries aims to become an integrated energy player, expanding into renewable and clean energy through recent acquisitions and investments.
- The company expects profit contributions from the recently acquired UK Power Reserve in FY19.
- The India operation is anticipated to continue improving due to favorable domestic market conditions and financial position.
- The group's overall performance improvement is expected to slow down as the Marine segment remains a drag.
Key Financials (2Q18)
| Metric | 2Q18 (SGD mn) | 2Q17 (SGD mn) | YoY (%) |
|---|---|---|---|
| Revenue | 3,344 | 2,282 | +46.6% |
| Gross Profit | 189 | 322 | -41.3% |
| Profit Before Tax | 89 | 91 | -2.1% |
| Profit After Tax | 65 | 59 | +10.0% |
Valuation Analysis
| Segment | Multiples | BVPS (SGD) | PPS (SGD) | Market Value (SGD mn) |
|---|---|---|---|---|
| Utilities | PB of 1.2x | 1.8 | 2.1 | 3,765 |
| Others | PB of 1.0x | 0.7 | 0.7 | 1,236 |
| Marine | PB of 1.6x | 1.1 | 1.8 | 2,263 |
| Total Market Cap | 7,343 |
Financial Performance (FY15–FY19e)
| Metric | FY15 | FY16 | FY17 | FY18e | FY19e |
|---|---|---|---|---|---|
| Revenue | 7,907 | 8,346 | 11,127 | 12,013 | 25,606 |
| Gross Profit | 1,105 | 946 | 1,035 | 1,355 | 23,918 |
| Net Profit | 395 | 231 | 316 | 449 | 7,439 |
| P/E (x) | 14.3 | 28.8 | 15.3 | 10.7 | 10.7 |
| P/B (x) | 0.9 | 0.9 | 0.8 | 0.6 | 0.6 |
| EV/EBITDA (x) | 12.4 | 11.9 | 12.7 | 9.9 | 8.3 |
| Dividend Yield (%) | 2.8 | 1.7 | 1.9 | 1.9 | 1.9 |
Growth and Margins (FY15–FY19e)
| Metric | FY15 | FY16 | FY17 | FY18e | FY19e |
|---|---|---|---|---|---|
| Revenue Growth (%) | -12% | -17% | +6% | +33% | +8% |
| Gross Profit Growth (%) | -48% | +51% | -14% | +9% | +31% |
| EBIT Growth (%) | -45% | +25% | -19% | +6% | +38% |
| Net Income Growth (%) | -31% | -28% | -42% | +37% | +42% |
| Margin (%) | FY15 | FY16 | FY17 | FY18e | FY19e |
|---|---|---|---|---|---|
| GP Margin | 8% | 14% | 11% | 9% | 11% |
| EBIT Margin | 7% | 10% | 8% | 6% | 8% |
| NP Margin | 6% | 5% | 3% | 3% | 4% |
Key Ratios (FY15–FY19e)
| Metric | FY15 | FY16 | FY17 | FY18e | FY19e |
|---|---|---|---|---|---|
| ROE (%) | 10% | 7% | 4% | 5% | 6% |
| ROA (%) | 3% | 2% | 1% | 1% | 2% |
| Net Debt or (Net Cash) | 5,226 | 7,339 | 7,161 | 7,610 | 7,960 |
| Gearing (%) | 65% | 90% | 88% | 89% | 80% |
Recommendation
- PSR Rating: BUY (Rating 1)
- Target Price: SGD 3.70
- Total Return Forecast: 38.9%
- Closing Price (as of 7 August 2018): SGD 2.700
- Forecast Dividend: SGD 0.050
Contact Information
-
Hong Kong Representatives:
- Vaughn LI: Editor, Tel: (852) 2277 6628, Email: foreignstock@phillip.com.hk
- Benny WANG: Dealing Director, Tel: (852) 2277 6720, Email: bennywang@phillip.com.hk
- ZHANG Jing: Research Analyst (Transportation and Automobiles), Tel: (86) 2151699400-103, Email: zhangjing@phillip.com.cn
- Terry LI: Research Analyst (TMT, Education and Finance), Tel: (852) 2277 6527, Email: terryli@phillip.com.hk
- Eurus ZHOU: Research Analyst (Pharmaceutical and Consumer), Tel: (852) 2277 6515, Email: euruszhou@phillip.com.hk
- Tracy KU: Research Analyst (Retail and Property), Tel: (852) 2277 6516, Email: tracyku@phillip.com.hk
-
Sales Contacts:
- Aric AU: Manager, Corporate & Institutional Sales, Tel: (852) 2277 6783, Email: corporatesales@phillip.com.hk
- Matthew WONG: Manager, International Sales, Tel: (852) 2277 6678, Email: foreignstock@phillip.com.hk
- Yoshikazu SHIKITA: Manager, International Sales (Japan Team), Tel: (852) 2277 6624, Email: yshikita@phillip.com.hk
Disclaimer
- This report is prepared for general circulation and is not tailored investment advice.
- Investors should seek financial advice before making any investment decisions.
- The report may not be redistributed or disclosed without express written consent from Phillip Securities (Hong Kong) Limited.
- Investment involves risks, and the Risk Disclosures Statement is available at http://www.phillip.com.hk.
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