As we should all have known, the SG market is currently selling at premium prices. However, there will always be gems to be uncovered since different equities move in different directions. I personally find that Sembcorp Industries can possibly be a good call with suffice safety margin. Below is a simple breakdown:
1) Operating Nature:
1) Operating Nature:
Sembcorp Industries is
segmented into four major plays, at least as per its financial statements.
-Utilities: Its strongest and most
defensive segment
-Marine: As compared to FY15 deficit, FY16 was a
comeback year which it returns to a flat positive net profit. This may be a great rebound.
-Urban: Definitely not its strongest sector but consistent between FY15 and FY16.
-Others/Corporate: Biggest loss contributor of the Group in recent years
2) Profits sustaining for the Losses
This acts as a risk by itself as well as an insight of its defensive nature.
3) Potential Upside Risks:
As per DBS
Research, Sembcorp Industries will be the current best pick of the three Oil and
Manufacturing Large Caps in Singapore in terms of potential returns/upside. A $3.80 Target Price translate
up to a 22.5% gain in share price as per today's context.
4) Current Dividends is not
the most attractive
If situation allows, the
dividend yield may return back to its good old days at 5%+/-. Thus, there is potential gain in price + gain in dividends yield. (Double up or double down)
5) Competition in Power and
Gas Supply
The increasingly competitive power segment in Singapore is another worry plaguing investors along with the current
oil rigs offshore's situation.
6) List of Major Support
Nevertheless, Sembcorp
Industries is backed up by transactions from Singtel, SATS, Singapore Power, SATS,
PSA etc. It is also heavily invested by Temasek Holdings.
7) Charting:
The "Max" chart also speaks for itself:
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