Sembcorp Industries' new utility projects to buoy earnings despite weak marine business

Additional 3,800MW of power generation capacity expected until 2018.

New facilities will add to Semborp Industries (SCI)’s power generation and water treatment capacities, which should increase earnings assuming that the operations are profitable, said DBS Vickers Securities.

The research firm estimates a total of 3,800MW of power generation capacity, 140 tonnes per hour of steam capacity and 1.3 million cubic metres per day of water treatment capacity are expected to be added from now until 2018.

The estimate roughly translates to 36%, 3% and 14% increase in power, steam and water treatment capacities respectively.

SCI's total net profit from local and overseas operations totaled $149.9m in 1H2016. Utilities in Singapore alone account for almost 40% of total net profits or $58.6m.

Sembcorp Marine’s orderbook, meanwhile, has declined to S$9.2bn as at Jun-2016, in tandem with the downturn in the offshore oil & gas industry.

Order wins of S$3.2bn in 2015 were weak but respectable amidst the current environment; 2013 and 2014 saw full-year order wins of S$4.2bn.