UOB KayHian downgraded Sembcorp Industries to Hold after earnings disappointed.
The brokerage said Sembcorp’s 2017 core net profit of S$277 million, down 44 percent on-year, was only around 74 percent of its forecast.
“India and Marine remain a drag, and this is expected to continue for an extended period,” it said in a note on Monday. “The utilities-focused strategic review represents a shift toward improving earnings quality (positive), but we fret over the shift towards more acquisitions.”
It cut its 2018-19 earnings forecasts by 13-20 percent and sharply lowered its target price to S$3.28 from S$3.87. It suggested an entry price of S$2.90.
”We opt to wait for signs of SCI’s execution of its new strategy, and see limited upside in the interim,” UOB KayHian said.
The stock ended Monday down 1.24 percent at S$3.20.