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Sembcorp Industries Powering Ahead

SembcorpIndustriesLogo Sembcorp Industries Limited (SGX: U96), a conglomerate with businesses in utilities, marine and urban development, powered ahead with sterling growth in revenue and net profit for the nine months of 2013 (9M 2013). Its marine business is listed in Singapore Exchange as Sembcorp Marine Limited (SGX: S51) and its earnings was released last week.

For the nine months ended 30th September 2013, the revenue came up to S$7.8 billion, a growth of 6.1% over the previous year. The growth was mainly due to a 26% rise year-on-year in revenue for the marine business. The utilities and the urban development divisions saw a revenue decline of 9% and 23% respectively year-on-year.

(S$’000)

Revenue

9M 2013 9M 2012 % change
Utilities

3,855

4,223

-9

Marine

3,831

3,050

26

Urban Development

6

8

-23

Other Businesses

131

92

42

Total Revenue

7,823

7,373

6

The net profit, for 9M 2013, was at S$596.7 million, an increase of 9% year-on-year. The utilities segment chalked up a 27% gain over the previous year to S$373.7 million. This was mainly due to one-off gains from the initial public offering (IPO) of Sembcorp Salalah Power and Water Company in Oman. Stripping off these gains, the utilities segment managed a 4% year-on-year growth in net profit.

  (S$’000)

Net Profit

9M 2013 9M 2012 % change
Utilities

373.7

293.5

27

Marine

226.3

225.4

Urban Development

12.6

19.3

-35

Other Businesses

28.3

27.7

2

Corporate

-44.2

-17.3

-155

Total Net Profit

596.7

548.6

9

For the third quarter of 2013 (3Q 2013), the revenue ballooned by 31% to S$3.0 billion and the net profit grew 40% to S$254.4 million, as compared to 3Q2012.

To put things into perspective, Keppel Corporation Limited (SGX: BN4), another world-famous conglomerate involved in almost parallel industries as Sembcorp Industries, released its 9M 2013 results late last month and it saw its revenue and net profit slide 19.9% and 28.2% respectively.

On the balance sheet, as of 30th September 2013, Sembcorp had a total borrowing of $1.8 billion, of which, $324.5 million are due within the year. With a cash hoard of S$2.3 billion, the company is sitting on a net cash position of S$500 million.

The company generated a steady cash flow from operations for the nine months. It brought in cash from operations of S$1.3 billion, as compared to S$244.2 million last year.

Group President & CEO of Sembcorp Industries, Mr Tang Kin Fei, said, “Sembcorp delivered healthy profit growth in the first nine months of the year… With our strategic presence in key emerging markets, strong pipeline of projects and a robust Marine orderbook of S$13.5 billion, Sembcorp is well-positioned to deliver sustainable long-term growth.”

Long-term shareholders of the company would be delighted by the share performance of the company. For the past ten years, Sembcorp Industries had delivered a capital gain of 309.2%. This triumphs the Straits Times Index (SGX: ^STI), which managed a gain of only 76.6%.

The shares of Sembcorp Industries last traded at S$5.32 on Monday. It is trading at 12.6 times its historical earnings and the dividend yield is at 2.8%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.