Is Sembcorp Ind(U96) rising up again?

Is Sembcorp Ind(U96) rising up again?

Brief background of the company:
Sembcorp Industries Ltd is engaged investment holding, as well as the corporate headquarter which gives strategic direction and provides management services to its subsidiaries, and production and supply of utilities services, terminalling and storage of petroleum products and chemicals. The Company operates in three segments: Utilities, marine and urban development.

Recent Event:
23 Feb, 2017: Sembcorp Ind released the Full Yearly Results of 2016

Related News:
“Sembcorp Industries Limited’s Latest Earnings: A Tale of 2 Businesses”:

“Sembcorp profit up 143% despite revenue drop”

“Sembcorp’s 4Q earnings more than double to $147.5 mil”

 

Key Financial highlights from the results:

1. Though the Sembcorp industries’ fourth quarter revenue fell 16.3% since the fourth quarter of 2015, the net profit soared to $153m, managed to swing back to profitability from the loss of $146m in same period of last year. The improved Quarter net profit was driven by the higher contribution from Utilities’s India operation and Marine, and lower expenses resulted from less amount of allowance for doubtful debt. However, based on the full year result, both Sembcorp industries’ revenue and profit have edged down, with the percentage of decline of 17.2% and 3.8% respectively.

2. Sembcorp industries observed a growth of 17.2% in cash and cash equivalents in their balance sheet, but according to the cash flow statement, those cash and cash equivalent are accumulated cash since the last finance year. The group did not earn positive free cash flow from the operation in 2016. Additionally, they also witnessed larger amount of receivables and interest-bearing borrowings.

3. According to Sembcorp industries, the EPS is 19.9 cents in FY16, has experienced a decline of 32% from 29.2 in FY15. The ROE is 6.2% with a payout ratio of 40%. The FY2016 total dividend is 8.0 cents per share. The P/E ratio is 16.201, relatively lower than that of Marine industry (108.555) and that of transport industry (32.716).

4. From the perspectives of segment performance, Sembcorp industries has successful Utilities business in overseas market such as China and India, which contributed 63% of profit in Utilities segment. The significant improvement in Marine industry has saved Sembcorp industries from loss compared to performance in previous year. The Urban development segment observed similar number with the last year.

5. Compared to its peer companies, Keppel corporation limited:


(Charts source here.)

Sembcorp industries has overall the similar trend in revenue and profit growth, and these two groups observed similar amount of revenue in FY2016. However, the profit margin of Sembcorp is approximate a half of that of Keppel corp. Besides, Keppel corporation has better cash flow position than Sembcorp industries.

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