Broker: OCBC Investment Research
Target Price: $3.07
Sembcorp Industries (SCI) reported an 18.9 per cent year-on-year fall in revenue to $1.9 billion and a 24.7 per cent drop in net profit to $107 million in the first quarter of this year.
The 7 per cent year-on-year drop in turnover, mainly due to high sulphur fuel oil in Singapore, was partially mitigated by higher contribution from India. The segment registered a 1 per cent rise to $75.2 million. The Singapore power business, however, continued to be impacted by competition. Downside risk to SCI from the marine business remains.
After a 36 per cent run-up in share price to $3.19 in early March, the stock lost about 14 per cent of its value. At current levels, an upside potential of 14 per cent is estimated.
Broker: DBS Group Research
Target Price: $1.53
At a post-results lunch meeting last week, SMRT management said five key strategic thrusts are in store: to improve operational performance, enhance customer experience, strengthen workforce health, enhance organisational excellence and ensure sustainable growth.
Management said upgrading work will continue on the North-South-East-West Line. SMRT will look to compete in the tender for Thomson East Coast Line, and the tender for operators is expected to occur by end of the year.
With the government bus contracting model expected to take effect from September, margins would improve as fare-box revenue risks are removed. Its taxi business achieved an operating profit of $17 million in financial year 2016, up from $13.7 million last year. Core operations will remain challenging on the back of higher operating costs.