Sembcorp battered by S$23m receivables provision and receivership

Two out of three divisions are hurting Sembcorp’s performance.

According to a report by RHB, Sembcorp’s problems piled up this quarter as Sembmarine’s weak earnings compounded a S$23m receivables provision partly in relation to Jurong Aromatics’ ageing debts, in accordance with Sembcorp’s group accounting policy.

Sembcorp management also cut guidance for the company’s urban development unit. State government in Nanjing, China encouraged Sembcorp to sell commercial and industrial land, and held back on releasing residential lands for sale.

RHB notes that Sempcorp stocks are unlikely to perform well, as earning volatility increased for two out of its three divisions.

“Deteriorating earnings contributions from both the urban and marine divisions would weigh on the group,” said RHB.