Sembcorp Industries > Buy UOB Kay Hian, Feb 1 Feb 1 close: S$2.58 Target price: S$3.20

SEMBCORP Industries (SCI) is expected to report 2018 net profit of S$321 million and Q4 2018 core net profit of S$77 million. We expect most geographies to be stable, barring India and the UK. The former is expected to report a quarterly loss, while the latter is expected to report strong earnings on the back of UK Power Reserve.

We expect Q4 2018 results to have few surprises that will stir share price. Weakness in the business outlook has largely been priced in. Questions will likely revolve around a review of SCI's strategy and the status of the India IPO. Furthermore, we would question SCI on how it intends to fund future inorganic growth, given the slow pace of divestments and limited cash balance to support both the utilities and marine businesses.