SHIPPING & MARINE, UTILITIES | Staff Reporter, Singapore

Why investors should not lose hope for the embattled SembCorp

Its utilities segment is still robust.

Most investors would normally wish to hold a company that provides good return of equity over the long term. This might not be the same for SembCorp Industries, as its marine arm eyes to cut dividends for its shareholders. What could further dampen the investors' mood is the loss of $22m incurred by the marine segment dragging the group's net profit down 56%. For OCBC Investment Research, this should not cause investors to lose hope in the company.

According to the brokerage firm, the group has grown its operations to 14 countries and looks set to cement its presence in Asia as a leading developer, owner and operator of energy and water assets.

"Though its marine segment is facing headwinds, the longer term outlook for the utilities segment remains positive, and the group is well positioned to seize emerging market opportunities," OCBC said.

The brokerage firm noted that SembCorp has a strong track record in generating and supplying power, steam and natural gas, and providing total water and wastewater solutions for industries.

Meanwhile, CBC mentioned that SembCorp is expecting more power assets to start up.

"Looking ahead, the commercial operations date (COD) of unit 3 of the SGPL plant in India is expected to be in 4Q16, while unit 4’s COD is expected to be in early 2017," OCBC said.


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