With Billions In Revenue, Can SembCorp Industries Ltd Continue Growing?

Credit: Simon Cunningham

SembCorp Industries Ltd (SGX: U96) is one of the largest and most established conglomerates in Singapore.

With businesses in the utilities (think power generation and wastewater treatment), marine engineering, and urban development sectors, the company is today a bona-fide multi-national business with interests and assets in many countries including Singapore, China, India, the United Kingdom, and more.

For another perspective on SembCorp Industries’ size, it had earned S$10.9 billion and S$1.08 billion in revenue and profit, respectively, in 2014. That level of sales also makes SembCorp Industries the 10th largest firm in terms of annual revenue amongst the Straits Times Index’s (SGX: ^STI) 30 constituents.

Given SembCorp Industries’ current revenue base and geographical reach, can it continue to grow over the next decade or must investors be prepared to see a stagnant company?

Power and liquid growth

Currently, SembCorp Industries’ portfolio of power facilities has an energy capacity of more than 5,000 MW. While that seems huge, it’s worth noting that there’s more room for growth.

To that point, the company’s already developing facilities that can generate an additional 3,000 MW of power by 2017 and these projects are located in China, India, the United Kingdom, and Myanmar.

On the water and wastewater treatment front, SembCorp Industries has a current capacity to handle nearly 8 million m3 per day. If we include the company’s water projects that are under development, SembCorp Industries’ total treatment capacity is projected to rise to more than 9.5 million m3 per day by 2016.

Engineering growth

As for the marine engineering segment of SembCorp Industries’ business, which mainly comes from the company’s majority ownership of rig builder SembCorp Marine Ltd (SGX: S51), it’s worth pointing out that the segment has an order book of more than S$10.6 billion currently with deliveries stretching to 2019.

The segment’s order book has been dinged partly due to the recent collapse in the price of oil (the order book was at S$11.4 billion at end-2014). But, SembCorp Marine has proven its innovative capabilities over the years by transforming itself from a basic ship-repair and shipbuilding outfit in its early years to a world-class oil-rig and drillship manufacturer today.

Banking on land for growth

Lastly, SembCorp Industries has a large land bank that’s available for development in its urban development segment. To that point, the company still has more than 3,579 hectares of saleable land in China, Indonesia, and Vietnam.

Foolish Summary

SembCorp Industries isn’t a simple business to understand given its multiple moving parts. But with its solid reputation and the multiple growth-avenues available in its pipeline, there appears to be ample room for growth for the firm. This is especially so when we consider that there’s plenty to do when it comes to infrastructure-related works in Asia.

SembCorp Industries, with its track record, is well-positioned to be one of the leading companies in helping to develop the infrastructure in the region for the benefit of both its business and the people of Asia.

If you like what you've seen and would like to have access to even more investing analyses and thoughts, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

You can like us on Facebook too to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any companies mentioned above.