Brokers' take

Sembcorp Industries | Neutral

July 2 close: S$3.92

Target price: S$4.10

RHB, July 2

THE Nghe An infrastructure project is the seventh such for the Vietnam Singapore Industrial Park Joint Venture Co (VSIP JV). With surveying, planning, approvals and eventual construction to take multiple years, we do not anticipate any near-term financial impact from this latest project.

Hyflux's 411 MW plant will be connected to the grid in H2 2015, adding 3 per cent additional capacity to Singapore's already oversupplied market (total licensed capacity was 82 per cent above peak demand in 2014). We believe that it could take three to five years for demand growth to substantially trim this oversupply. Further threats to near-term profitability are: i) customers renegotiating fixed-rate contracts downwards using Q1 2015 pool prices as benchmarks, ii) percentage of power generation sold through vesting contracts is being lowered, iii) increasing take-up by consumers of solar power generation panels, iv) Tesla's PowerWall (or similar products), a rechargeable lithium-ion battery aim…