SINGAPORE (July 20): Despite notching a net loss of $131 million in 1H2020 - including an exceptional loss of $191 million - RHB analyst Leng Seng Choon sees underlying strength in Sembcorp Industries (SCI) due to potential growth drivers in its energy business. He has maintained his “buy” call on the counter and maintained his target price at $2.11 at a 19% upside. 

“Whilst we forecast an FY20 net loss, we remain positive on Sembcorp Industries on its energy and urban segments driving future growth, as well as the stoppage of bleeding from the marine business after the de-merger with Sembcorp Marine,” says Leng in a broker’s report today. Announced two days ago, the loss is a sharp reversal from SCI’s $191 million profit in 1H2019. 

Despite recording a net loss of $5 million in 1H2020, Leng says that the 15% y-o-y reduction of the unit’s $156 million net profit (excluding exceptional items) was due to Covid-19 pressure as energy prices collapsed from weakened demand. 

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