Company Name: SEMBCORP INDUSTRIES LTD
| Research House: Credit Suisse | Price Call: BUY | Target Price: 6.10 |
Concerns over Sembcorp Industries’ foray into residential property in Vietnam may not be warranted, Credit Suisse says.
“This development is in line with the company’s strategy to further enhance yield through selective commercial and residential development at its industrial parks. We also note that it has previously developed residential projects at the Wuxi-Singapore Industrial Park in China.”
It notes the Vietnam project’s total development cost is estimated at US$165 million ($201.5 million), with Sembcorp Development’s US$5.2 million equity investment internally funded; SDV will have a 40% stake in the JV project, while Vietnam Singapore Industrial Park JV will have 60%, and as SDV owns 47.4% of VSIP, its effective interest will be 68.4%, it notes.
It keeps an Outperform call with a $6.10 target, saying the utilities stub remains attractively valued; “we expect continued strong performance to drive a rerating.” The stock is up 0.4% at $5.47.
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