SEMBCORP INDUSTRIES 4Q19

Sembcorp Industries announced its 4Q19 results before the market opens on 21 February. The losses at S$15m for 4Q19 came in smaller than my expectations, even after accounting for its share of Sembcorp Marine’s substantial losses. These were due to two main reasons. One, Sembcorp Industries’ Urban Development division performed extremely well this quarter with the sale of a China development that boosted divisional net profits to S$87m in 4Q19 vs. S$33m in 4Q18. Such strength is unlikely to be recurring, in my view. Two, its Energy division, net of all the impairments previously announced, put up a credible performance, with total net losses of “only” -S$63m in the current quarter. This was due to India’s strong performance which was two-fold. India’s profit of S$46 in 4Q19 vs. S$-6m in 4Q18 was likely due to better core operating performance from its renewable energy entity SGI, as well as one-off benefit from insurance and vendor settlements....