5 Quick Things Investors Should Learn About SembCorp Industries Ltd

SembCorp Industries Ltd (SGX: U96) is one of the cool companies in Singapore that shares webcasts of their quarterly earnings presentations (the link for SembCorp Industries is here).

There may be new information investors can pick out from these webcasts.

SembCorp Industries has three business segments, namely Utilities, Marine, and Urban Development & Others. The former two are by far the most important for SembCorp Industries and it’s worth noting that the conglomerate’s Marine business stems from its majority ownership of SembCorp Marine Ltd (SGX: S51).

You can read more about SembCorp Industries here .

Powering down?

Below are five useful things I learned from listening to SembCorp Industries’ recent first-quarter webcast:

  1. Koh Chiap Khiong, chief financial officer, was on hand to give a rundown of the financial figures. He noted the shift in contribution between marine and non-marine businesses. For the first quarter last year, the marine segment made up 43% of net profits. This figure reduced to just 28% for the first quarter this year, reflecting the tough conditions in the marine sector.  
  2. On the utilities segment, Koh said that the quarter’s net profit rose 1% year on year. Here, the overseas operations grew by 12% year on year, but was held back by a weak performance out of its Singapore operations. The overseas utilities operation accounted for 65% of its net profit for the reporting quarter.
  3. Koh provided an update on the product sub-segments of the Utilities segment as well. The energy sub-segment was the standout performer with a 19% year on year growth to $47 million. The energy sub-segment accounted for 55% of the total utilities segment’s net profit.
  4. There could be more to look forward to for the overseas utilities segment. SembCorp Industries has secured a 570 megawatt (MW) power purchase agreement (PPA) with the Telangana in India. With that, 86% of the Thermal Powertech Corporation India (TPCIL) power plant’s total net generating capacity has been secured under long-term agreements. Koh said that SembCorp Industries has also signed a 22-year agreement with the Myanma Electric Power Enterprise (MEPE) for the 225 MW Myingyan Independent Power Producer (IPP).
  5. SembCorp Industries ended the year with a net debt position of $6.6 billion, an increase from $5.2 billion recorded on the same date a year ago. Interest coverage fell to 3.6 times, down significantly from 7.2 times in 2015. Koh said that India’s projects will be highly geared in the first few years of operations, but the ratio will improve when the debts are paid down progressively.  

Foolish takeaway

To buy and hold for a company for the long term also means keeping up with developments in the company.

The access to management teams via webcast gives the Foolish investor a fair chance to judge for themselves on whether they would like to be invested alongside the management teams that they have chosen. It also helps us put together a more complete thesis around the company and keep up with developments in its industry.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.