3 reasons behind Sembcorp's ugly performance in Singapore

Singapore profits fell 19%.

According to CIMB, as expected, Singapore profits fell by about 19% yoy and qoq from 1) lower adhoc gas sales, 2) weaker power spread (blended spread dipped by 8-9% yoy), and 3) the lack of deferred billings that boosted 4Q12’s earnings by S$8m. 

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Management guidance of competition from new gencos in 2H13 remains and we have factored in an 11% yoy dip in profits.

Overseas operations contributed 44% of Utilities’ profits. The acquisition of wind-power assets, AES in China, has proven to be earnings accretive; it lifted China profits by 172% yoy (stable qoq) to S$13m.

Middle East profits of S$8m (+34% yoy, +50% qoq) were from the full-commissioning since 2Q12 and the lack of minor-outage in the Salalah plant. UK profits rose 96% qoq to S$8m (-14% yoy) as Wilton 10 resumed operations following a 17-week maintenance in 4Q12.

Power prices in the UK have also improved from an average of £45/MW in FY12 to £54/MW in 1Q13. Vietnam profits dipped 36% yoy and 16% qoq to S$10m from lower capacity charge tariffs in Phu My3 Vietnam.