OCBC Investment Research initiated coverage of Sembcorp Industries Ltd with a "buy" rating and a S$6.48 target price, citing the Singapore energy, water and marine company's growth potential and relatively stable earnings.
Sembcorp shares rose 0.8 percent to S$4.91. The stock has fallen more than 6 percent so far this year versus the nearly 2 percent drop in the benchmark Straits Times Index.
OCBC said the nature of Sembcorp's utilities business was relatively stable as the demand for utilities generally does not vary significantly over a short period of time.
Growth is also driven by asset acquisition and construction, while Sembcorp's marine arm is well-positioned to tap on demand from the offshore oil and gas industry and its urban development segment has a focus on emerging markets, OCBC added.
Sembcorp has been consistent in paying out dividends of at least S$0.15 per share each year since 2009, implying a minimum dividend yield of 3.1 percent at current prices, OCBC said.