Cheaper and indirect investment into Sembcorp Marine. At SCI's last closing share price, the implied value of SMM in our SOTP valuation metrics for SCI is S$2.59, vs. SMM's last closing share price of S$3.30.
2Q09 results were above-expectation. SCI's net profit increased 2.7% y-o-y to S$142m in 2Q09, vs. our forecast of S$132m. This was due to its Marine business' stronger-than-expected EBIT margin, at 11.1%, vs. the 9.9% in 1Q09 and our forecast of 9.8%.
Utilities business' performance is in line. SCI's Utilities business delivered S$47.9m (+11% y-o-y) net profit in 2Q09, and S$99.0m (-5%) in 1H09. This was due to higher contributions from its less established markets in Vietnam, China and Middle East, which mitigated the absence of strategic fuel sale in Singapore and the expiry of certain favorable contract in the UK.
Raises profit estimates in FY09-11. We have raised recurring net profit forecast to S$549m (+5.1%) in FY09 and S$574m (+5.6%) in FY10, mainly due to stronger-than-expected profit margins from the Marine business.
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