Sembcorp's marine business sinks deeper as headwinds mount

Marine segment contribution is poised to shrink to around 20%.

Sembcorp Industries (SCI) is becoming more of a utilities company now, as its marine business is poised for a downturn because of headwinds.

According to UOB Kay Hian analyst Foo Zhi Wei, low contract win rate going forward will keep SCI's marine earnings low.

"We expect annual contract wins of S$1.5b over 2016-18 and are forecasting earnings of S$100m-120m for 2017-18," Foo said.

More so, contributions from the said segment will likely shrink from over 50% to around 20% in the future, dwarfed by its utilities earnings.

"As SCI secures more awards for power projects, it is becoming more of a utilities company, with marine earnings on the side," the analyst noted.

SCI is a conglomerate with two dominant businesses comprising of Sembcorp Marine, an offshore oil & gas heavy engineering services provider, and a global utilities business.