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Sembcorp Industries’ Singapore profits to crash on back of intense competition

Singapore Energy’s profit shrank 34% in Q4.

Sembcorp Industries’ Singapore operations will continue to struggle on back of intense competition and persistently lower oil prices.

Singapore Energy reported a 34% quarter-on-quarter drop in profits to $26.8m due to weaker spark spread and lower high sulphur fuel oil (HSFO) prices.

According to CIMB, Singapore energy is in for a 13% profit contraction in FY15. Singapore Energy’s contribution could drop to 48%, a far cry from its historical level of above 50%.

“We forecast a 13% dip in Singapore’s profit in FY15 on 1) weak spark spread as competition remains stiff with some contracts being renewed at lower rates, 2) lower HSFO as the oil price drags and 3) lower vesting contracts (from 40% to 30%),” stated CIMB.

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Brazilian companies push for deal to minimize Petrobras scandal

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Double whammy from both energy and marine sectors...
I wonder how much Sembcorp's first (and future) power plant in India will contribute to the bottom line. Hopefully it can help offset some of the fall in Singapore's operations as well as the Marine segment and make overall results more stable. I guess only time will tell..

http://infopub.sgx.com/FileOpen/Sembcorp...eID=337005
Attended the AGM today and walked away feeling good with the long term prospect of SCI. I especially like its utilities business, which is now the biggest profit contributor in the group. It is also worth noting that half of the profit of its utilities business came from overseas, which provides a cushion to the competitive Singapore market which is facing over capacity at the moment. Besides, its India plants will start contributing to the bottom line starting this year after a long gestation period of 4 years. This will help cash flows and also profit numbers. India is currently facing a shortage of power supply, and have to resort to power rationing. This according to the CEO.

Short term wise mgmt is sounding caution due to Marine down cycle and competitive utilities biz in Singapore. However, mid to long term the tone is pretty positive. There is also the possibilities of turning some mature assets into biz trust, to recycle capital and also to unlock value for the group. SH will stands to gain if such event does occurs. I am also quite impress with the CEO and Chairman for the way they handle the meeting.

SCI shares price went up by 11c today to close near day high of $4.88, amid a lacklustre overall market. I wonder if other fellows SH are accumulating the shares after attending the meeting and feeling more positive about the prospect of the company. For now, looking forward to the 11c final dividends which will be paid on 18 May.
Recycling into biz trust sounds good. Wonder if they would create their own one or offload to Keppel Infra Trust?

utilities is moribund but nv goes out of biz, cash cow
well, anybody hold for long term?
(22-04-2015, 09:28 PM)yeh Wrote: [ -> ]well, anybody hold for long term?

Yes. Have small position for this and did intend to hold for long term.

Unless the price suddenly go too high that I deem it to be too expensive.
(22-04-2015, 09:28 PM)yeh Wrote: [ -> ]well, anybody hold for long term?

vested as AFS and not FVTPL
Sembcorp sees 23% fall in 1Q earnings to $142.2 million amid a tough market

By PC Lee / theedgemarkets.com | May 7, 2015 : 5:27 PM MYT
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SINGAPORE (May 7): Sembcorp Industries posted a 23% drop in 1Q earnings of $142.2 million from $184.8 million a year ago amid challenging market conditions.

Revenue fell 11% to $2.3 billion from $2.6 billion.

Sembcorp said the utilities and marine businesses continued to be the main profit contributors of the group, accounting for 97% of group net profit in the quarter under review.

In 1Q, the utilities business contributed $74.5 million in net profit to the group compared to $91.6 million in 1Q2014.

Performance of the utilities business however was impacted by continued intense competition in the Singapore power market.

During the quarter, the first of two units of the 1,320-megawatt TPCIL power plant in India started operation.

Meanwhile, the marine business contributed a net profit of $64.7 million compared to $74.3 million a year ago mainly due to lower rig building and repair earnings.

The urban development business recorded a net profit of $1.1 million in the quarter compared to $19.5 million.

Return on equity on an annualised basis was 9.7% and earnings per share amounted to 7.8 cents. Cash and cash equivalents stood at $1.6 billion.

Tang Kin Fei, Group President & CEO of Sembcorp Industries, said, “Amidst the challenging environment for our Singapore energy operations and Marine business, we continue to focus on project execution, as well as on enhancing operational excellence and efficiency, to manage our costs and maximise earnings. Underpinned by sound business fundamentals and a healthy pipeline of projects, Sembcorp remains committed to delivering long-term value and growth.”

Sembcorp said this year is expected to be challenging for its utilities division as Singapore’s energy business continued intense competition in the power market as well as low oil prices.

Its marine business expects to face a challenging year ahead with the ongoing cutback in global exploration and production expenditure that has resulted in the scarcity of new orders for the industry this year amid intense competition.

Sembcorp closed 1 cent lower at $4.49 today.
Heavy selling after 1Q result.
anyone planning to buy? at say $4.20 or $4?
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