Why 'getting India right' will be a key focus for the new Sembcorp chief

The group eyes improving its net loss of $16m in the country.

Newly-seated Sembcorp Industries’ CEO Neil McGregor will be reviewing the group’s focus on performance, sustainability, and value creation especially in urban development overseas.

A report from CIMB said that improving the ROIC in India will likely be McGregor’s next priority, considering that the group suffered a $16m net loss in the country.

“Refinancing of interest costs paid off in TPCIL, as the plant turned in higher-than-expected profit of $12m (4Q16: -$4m). The project loan of $1.4b was refinanced on lower interest rates of 10% from 13%. Despite the plant shutting down on January 17, PLF inched up QoQ to 83% in 1Q17 (4Q16: 81%) with a better heat rate, suggesting that the worst could be over,” CIMB said.

Meanwhile, utilities and urban development are expected to remain core for SCI, but CIMB does not expect McGregor to make major changes that will shake up business in the short-term, though his influence is expected to be felt over time with new priorities in focus.

Here’s more from CIMB:

Our FY17 EPS is adjusted up by 15% on higher urban development. Downside risk could be limited with one less problematic plant in India to tackle. Singapore’s earnings have also bottomed out as 1Q17 came in slightly above expectations ($34m), with no one-offs.

With every new CEO, SCI has seen transformation and rationalisation, which we believe could be a catalyst.