Maybank Securities analyst Kelvin Tan believes the recent pullback of Sembcorp Industries U96 is a buying opportunity.
Citing a “confluence” of re-rating drivers, Tan, in his June 29, note, has reiterated his “buy” call for the stock, along with a slightly raised target price of $6.10, from $6,
Riding on lofty energy prices, SCI’s market cap has recently crossed $10 billion, setting it up to be potentially included in the MSCI Index in August to November review period.
“While this can be a positive catalyst, the market is also anticipating positive news for SCI like its new renewable capacity target, capital recycling with potential partial stake sales and improved 2QFY2023 results on elevated power prices,” writes Tan.
He has raised his FY2023 to FY2025 earnings forecast by 2 to 4% by factoring in a “moderate” outlook for electricity prices with the Temporary Price Cap (TPC) in place from July 1, which is up around 10% in the first five months of 2023, versus full year 2022’s average.
Tan’s new target price of $6.10 is pegged to 12x forward FY2024 earnings, in line with the regional peer average.
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As at 9.52am, SCI shares changed hands at $5.76, up 3.97%.
