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.