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.
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