SembCorp Shares Fall Short of Market Expectations

Shares of Singapore infrastructure conglomerate SembCorp Industries fell as much as 4.22 percent on Thursday after its half-year core performance came in below market expectations.

SembCorp was down six cents at S$1.60 after hitting a low of S$1.59. Volume was more than 1.1 million shares.

But analysts said the downside could be limited as investors were keen on the company's infrastructure businesses. The stock had climbed in the past few days in anticipation of good results.

Shares in SembCorp, which is more than 50 percent owned by the Singapore government, have outperformed the broader Straits Times Index by 12 percent this year, while falling about five percent in absolute terms since the beginning of 2001.

"The core operating performance was below expectations. That's why we see profit-taking today," said Lim Fang Suan, a fund manager at SG Asset Management.

SembCorp's net profit rose 1.3 percent to S$159.13 million ($90.4 million) in the six months to June 30, compared with S$157.10 million in the same period last year.

Its results announced on Wednesday were boosted by a one-off exceptional gain of S$121.14 million but net operating income rose by 12 perent to S$63 million.

Analysts were looking for core profit ranging from S$70 million to S$79 million. Of the five analysts who commented, three expected net profit of between S$90 million and S$107 million, including exceptional gains.

Following the results, ING Barings and OCBC Investment Research downgraded the stock to a hold from a buy, while SG Securities kept it as a hold. Analysts said SembCorp's projection of 30 percent net earnings growth for the full year from S$131 million in the previous year implied second-half profit would be just S$11 million above the interim figures.