SG: MARKET PULSE: Sembcorp Industries (5 Sep 2013)

Stock Name: Semb Corp
Company Name: SEMBCORP INDUSTRIES LTD

Research House: OCBC

Price Call: BUY

Target Price: 6.48

MARKET PULSE: Sembcorp Industries

5 Sep 2013

KEY IDEA Sembcorp Industries: Growing wastewater business in China Summary: Sembcorp Industries (SCI) announced last week that it will expand its water business in China's Liaoning Province with two new wastewater treatment projects in industrial parks in Panjin City. We see the initial phases of these projects as incremental expansions in China, adding about 10% to the group's total industrial water capacity in the country. The group's utilities business in China has seen good growth over the years, with net profit increasing from S$6m in 2009 to a forecasted S$50m this year. With the expertise to provide utilities like energy, water and wastewater treatment which will be in demand due to China's growth, we are optimistic on the long-term prospects of China as a key market for the group. Moreover, SCI has expertise on sustainable living with a focus on environmental protection, which should be in demand in China due to the country's environmental problems. Maintain BUY with S$6.48 fair value estimate. (Low Pei Han)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - US stocks gained Wed for a second straight day as Ford Motor Co. posted its best retail-sales month in seven years, while investors kept one eye trained on the debate over prospective US intervention in the Syrian civil war. - Indofood Sukses Makmur has succeeded in its takeover of China Minzhong, even before its mandatory offer for the remaining shares not already owned opens for acceptance. - Hiap Hoe has made its second overseas acquisition in as many months with the purchase of a A$43.8m (S$51.2m) commercial building in Melbourne's central business district. - Synear Food Holdings has received shareholders' approval to delist from SGX, clearing two of three hurdles for an exit offer to turn unconditional. - Tat Hong Holdings announced it would be divesting its flagship Gul Crescent site as part of its efforts to optimise operations in Singapore, and has secured a 16,100sqm plot of industrial land in Tuas for a new site.