Maybank Securities analyst Kelvin Tan has initiated coverage on Sembcorp Industries with a “buy” call and a target price of $3.40.
Tan’s target price represents a 14% upside to Sembcorp’s price of $2.95 as at Aug 2.
“We derive our valuation from a sum of the parts (SOTP) method, based on FY2023 forecasts. We value Sembcorp’s utilities business with an implied FY2023 P/E of 12.2x, which is +1 standard deviation above the five-year average of 10.8x. This is still below regional peers of 15.7x,” he says.