Citigroup: Sembcorp Industries - 15 Apr 2008

Buy: Long-term Growth Story Stays Intact

* Headwinds in the UK — SembCorp Utilities will renegotiate its UK supply contracts that expired on 31 March 2008. Replacement contracts are likely to be signed at higher costs. Management has guided to a S$20m-30m downward impact on the FY08 bottom line, equivalent to 19-28% of FY07 Utilities PATMI contribution from the UK.

* Lower utilities margins — We have cut our margin assumptions for Utilities, and now expect the division to post a ~3% decline in PATMI as lower UK earnings are partly offset by stronger contributions from Singapore and, to a smaller extent, China and Vietnam.

* Cautious guidance — Management is cautious on FY08 and expects to “maintain” its FY07 PATMI before exceptional items excluding the one-off tax write-back, with growth in other divisions offsetting the possible underperformance in the UK. Management appears more optimistic about longer term performance, citing contributions from new markets (e.g. China, Vietnam) and new projects (e.g. Wilton 10, strong Marine order book).

* 2% FY08E PATMI growth — We incorporate our SembCorp Marine earnings estimates into our model, and together with lower Utilities contributions, revise downwards our overall net profit estimates by 5-12% over FY08-09E. Our new FY08E net profit implies about 2% FY08E PATMI growth, in line with management guidance.

* Maintain Buy/Low Risk — We incorporate our SMM target price of S$3.82 into our SOTP valuation, and incorporate a 10% discount to our utilities sector EV/EBITDA peer valuation to factor in the short-term margin headwinds faced by UK Utilities. Our new target price of S$4.85 implies a total return of 25%.

Quant view: Contrarian

SembCorp Ind lies in the contrarian quadrant of our value-momentum map, with strong relative valuation but weak momentum scores. The stock’s migration from Glamor to Contrarian could be attributable to the fall in the stock price.

On momentum, SembCorp Ind ranks higher than peers in the Singapore market but lags behind in Industrials. However, on valuation, the stock lags behind peers in the Singapore market but ranks higher in the industrials sector.

From a systematic macro exposure analysis, SembCorp Ind, being a low-beta stock, should hold its own in falling markets. It also benefits from falling yields in emerging markets.

Company description

Sembcorp Industries (SCI) is a leading utilities and marine group in Asia. It provides integrated utilities and energy to industrial customers in Singapore, the UK and the region. It is also a leading global marine and offshore engineering group. Its main businesses are: integrated Utilities and Energy, Environmental Management, and Marine Engineering. SCI is a world pioneer in providing centralized multi-utility facilities, offering a full spectrum of third-party utilities; the leading provider of integrated environmental solutions in Asia Pacific; and one of the largest ship repair and conversion operations in Asia.

Investment strategy

We have a Buy/Low Risk (1L) rating on SembCorp Industries for its attractive valuations and exposure to robust industry fundamentals. SCI is an industrial conglomerate with three businesses: Utilities, Marine Engineering, and Environmental Engineering. Its Marine activities are undertaken by listed subsidiary SembCorp Marine. One of the key earnings drivers of the group is Utilities, which should see strong contributions from its facilities on Jurong Island, Vietnam and the UK. Marine Engineering is well supported by a robust order book and healthy industry fundamentals. Environmental Engineering is still small, but the group intends to expand it.

Valuation

Our target price of S$4.85 is pegged at a 5% holding-company discount to the group's estimated break-up value of S$5.13 per share. We prefer to use RNAV as our primary valuation method for conglomerates, given the group's different business activities. Our target price equates to 15.2x 2008E P/E, which is about a 7% premium to the Singapore market multiple of 14.3x and we think justified by the stock's stronger performance vs. the market and the potential for forward valuations to improve following any possible M&A activities within the utilities business.

Risks

In accordance with our quantitative risk-rating system, which tracks 260-day historical share-price volatility, we rate SCI shares Low Risk. Downside risks that could impede the shares from reaching our target price include: provisions for divestment of non-core assets; delays in contracts; a sharp decline in oil prices, which could adversely affect demand for the group's marine engineering business; and operational risks from its exposure to diversified markets.

NRA Capital: Sembcorp Industries - 3 Apr 2008

Competence in water treatment further strengthened

· SCI has just announced a new joint venture agreement with Zhangbao Industries to build, own and operate (BOO) an industrial water recycling facility in the Zhangjiagang Free Trade Zone in Jiangsu Province, China. SCI will hold an 80% stake in Zhangjiagang Free Trade Zone Sembcorp Water Recycling Co, with the remaining 20% under Zhangbao, an investment arm of the Zhangjiagang city government.

· The agreement plans for a 40,000 cubic metres per day industrial water recycling facility in the first phase. The plant will recycle industrial effluent from the used water treatment facility into recycled water and demineralised water.

· Investment cost is estimated at $22.4m (RMB 112.2m) and the j-v will have exclusive rights to supply recycled water including demineralised water to industries in the Zhangjiagang Free Trade Zone. It will complete in 1H:09.

· SCI currently has some 4m cubic metres per day of water under management worldwide. The group is also building and operating Singapore’s newest and largest NEWater plant (capacity of 228,000 cubic metres per day) and this is expected to come onstream only in 2010.

· We reiterate that it is the increasing percentage of recurrent income that makes us more comfortable with SCI’s business model in these volatile times, and maintain our Buy recommendation.

· Our forecast for this year and FY09 remain unchanged, fair value is $5.82. At yesterday’s closing price of $4.10, there is a 42 per cent upside to our fair value. Stock is also trading cum dividend, which is 3.7 per cent for FY07 and projected to rise to 3.9 per cent for the current year.

SCI’s water capabilities – in China

· The new plant just announced was chosen as a showcase project by the Governments of China and Singapore. It will be the group’s third water management project in Zhangjiagang, and will be expanded later as demand increases. It will be the first water sector project to be deemed as having “zero-discharge”, as part of continued efforts to fight increasing pollution of the water resources in the Yangtze River Delta.

· The first project in the free trade zone is a 20,000 cubic metres per day wastewater treatment facility serving industrial customers in the free trade zone and surrounding industrial parks. The 2nd 15,000 cubic metres per day high concentration industrial wastewater facility currently being built, will be able to treat high concentration wastewater with an average 4,000 mg per litre influent chemical oxygen demand.

· Both the high concentration industrial wastewater treatment facility and the third new industrial water recycling project will be part of the demonstration project under the MOU between China’s Ministry of Construction and Singapore’s Ministry of the Environment and Water Resources to showcase Singapore’s expertise in water management.

· The group also has other projects in Shanghai, Nanjing, Tianjin and Shenyang.

SCI’s water capabilities – in the Middle East

· SCI also recently signed an MOU with the Higher Corporation For Specialised Zones (ZonesCorp) of Abu Dhabi to jointly establish a worldclass utility services company. The new Company is expected to provide efficient utility services to ZonesCorp's specialised economic zones.

· The model appears to be based on what SCI is already doing on Jurong Island ie provide efficient, centralized utility services, facilities management and one-stop customer relationship management to all of ZonesCorp's industrial and commercial tenants, including those in the Industrial City of Abu Dhabi (ICAD), the Al Ain Industrial City and the numerous Worker Residential Cities currently under development.

· Amongst services proposed include the integrated supply of district cooling chilled water, electricity, wastewater treatment & recycling, high grade industrial water, natural gas, industrial gases and solid waste management.

NRA Capital: Sembcorp Industries - 6 Mar 2008

Price correction presents an opportunity

· SCI announced a 49 percent drop in full-year earnings, after exceptional items, to $526m. But at the operating level, earnings were up 46 per cent to $557.2m, in line with our expectations. The group took a hit in the exceptional items section, due to its share of SembCorp Marine’s derivatives trading losses.

· Part of the reason for the strong performance was also due to a $48m tax write-back on the profits from the sale of its Pacific Internet stake. Taking this out, operating net profit would have been $509m, slightly below our forecast.

· There’s been a selldown in SCI since the results were announced and partly in line with the market fall. We think the selldown is also due to some fund redemptions, and consider the correction has brought the stock back to an attractive entry level and upgrade our recommendation to Buy.

· Our forecast for this year and FY09 remain unchanged, fair value is $5.82. At yesterday’s closing price of $4.24, there is a 37 per cent upside to our fair value. Stock is also trading cum dividend, which is 3.5 per cent for FY07 and projected to rise to 3.8 per cent for the current year.

· While the guidance for the utilities division apparently disappointed some, the slack will likely be covered by the marine division, which is seeing a record order book and likely to post improving margins for the current year.

Divisonal review

1. Utilities. Earnings growth of 19 per cent to $230m was slightly below expectations due to a weaker performance from the UK operations and also higher costs due to new ventures and potential M&A. Management guided that contribution from UK would continue to be under pressure this year due to uncertainty of the cost renewal of coal supply. Also, overseas projects such as that in Shanghai Caojing, would be subject to higher costs due to regulatory price hikes in natural gas and there will be a lag period before this can be passed on to customers. While the outlook for Singapore operations is still stable, growth will not be exciting.

2. Marine division had a good FY07 and was marred only by the forex hit of $308m, with another US$50.7m reported as a contingent liability. Despite the charge, SembCorp Marine (SCM) still managed to post earnings for 4Q:07. The group’s order book has risen to a new all-time high of $7.4bn and earnings growth is likely to continue these two years, barring any more write offs for foreign exchange losses.

3. Enviro turned around from a disappointing FY06 loss to turn on profits of $14m. This was attributed partly to a good performance from its Australian JVs. The Australian entities have also made some new waste-to-alternative energy acquisitions which should be well received. In Singapore, the solid waste treatment and recycling facility has commenced operations.

4. Parks. This is another smallish part of the group’s business that should be able to maintain its performance this year. But the group has guided that if the US does enter into a prolonged recession arising from the sub-prime crisis, it could cause a slowdown in the manufacturing sector, affecting the industrial parks business under them.

Earnings outlook

Note that the Group has cautiously guided to “maintain its FY2007 PATMI before exceptional items and the one-off tax write-back”. This would imply a flattish FY2008 performance. We expect Marine to surprise on the upside and are also optimistic that the utilities division should perform well.

NRA Capital: Sembcorp Industries - 25 Feb 2008

Uncertainty over SCM removed

· SCI subsidiary, SembCorp Marine (SCM) announced a credible set of results last Friday. FY07 net profit was ahead of consensus expectations, with 4Q reporting a net profit of $0.8m despite a forex hit of $308m has been with another US$50.7m reported as a contingent liability.

· SCM’s performance was due to improved operating margins which rose 2.8ppt to 9.4% for 4Q07. This was partly attributed to the onset of contribution from better priced rigbuilding contracts. There was a 44% increase in rig building turnover to $2.5bn. Shiprepair also turned in
better margins as the group was able to select from higher value added projects. The group’s order book has risen to a new all-time high of $7.4bn underpinned by $5.4bn of wins in 2007 and another $403m for the year to date. We think continuing this momentum will not be a problem given oil prices are now near US$100 per barrel.

· Management has also stated that the bulk of costs would have been locked in at the time the contract is signed. The main fluid factors are labour cost and overheads, which account for some 20% of costs within the rig building division.

· More importantly, further uncertainty has been removed over SCM’s liability over the alleged unauthorized forex transactions. The group announced on February 14 that it has reduced the forex losses to $258.7m, had with 9 of the 11 banks involved in the dispute and would account $208 million as expense in the 4Q numbers.

· We maintain our Hold recommendation on the company. SCI is scheduled to announce its FY2007 results after the close of market on Feb 29. We don’t expect any negative surprises once the SCM write off has been factored in. Otherwise, the group’s other business divisions will show sustained growth while prospects remain positive despite the sluggish US economy.

DBOO PUB’s latest NEWater project

· SCI also announced last month that it has been awarded the fifth and largest NEWater project from PUB, following an open tender. The plant, under PUB’s Design-Build-Own-Operate scheme, will have an initial capacity of 15m gallons per day in 2009 and will ramp up to 50m gallons per day by 2010.

· When fully operational, it will be one of the largest water recycling plants in the world, producing 50m gallons per day of NEWater over a term of 25 years. The investment of $180m, will be funded through a mix of bank borrowings and internal sources.

· Though the project will enhance the group’s stream of long term recurrent earnings, it will not have any impact in the short term.

SembCorp Industries incorporated a wholly-owned subsidiary

January 30, 2008

Further to the announcement dated January 18, 2008 on the contract awarded to Sembcorp Industries in relation to the NEWater Plant from PUB, Sembcorp Industries announces that its wholly-owned subsidiary, Sembcorp Utilities has incorporated a 100%-owned subsidiary, Sembcorp NEWater Pte Ltd in Singapore as the special vehicle for this project.

The principal activity of Sembcorp NEWater is to design, build, own and operate the NEWater Plant at Changi and to supply NEWater to PUB.

The issued share capital of Sembcorp NEWater is S$17.6 million divided into $8 million ordinary shares and S$9.6 million redeemable preference shares.

SembCorp wins contract to design-build-own-operate Singapore's fifth and largest NEWater plant

January 18, 2008

- Sembcorp to supply 50 million gallons per day of NEWater to PUB Singapore

Sembcorp Industries (Sembcorp) has been awarded the fifth and largest NEWater project from PUB, Singapore’s national water agency, following an open tender.

The plant, under PUB’s Design-Build-Own-Operate (DBOO) scheme, will have an initial capacity of 15 million gallons per day in 2009 and will be ramped up to 50 million gallons per day (228,000 cubic metres per day) by 2010. When completed, it will be one of the largest water recycling plants in the world, producing 50 million gallons per day of NEWater over a term of 25 years.

The investment, valued at approximately S$180 million, will be funded through a mix of bank borrowings and internal sources. The first year NEWater price will be S$0.29966 per cubic metre.

Sembcorp is one of the pioneers in the water recycling business in Singapore since 1999, producing 35,000 cubic metres per day of high-grade industrial water for industrial customers on Jurong Island. When the Changi NEWater plant is completed in 2010, Sembcorp will manage a total of approximately four million cubic metres per day of water around the world. Sembcorp’s water management projects and services to its industrial customers globally include water recycling, water and wastewater treatment, and the supply of high-grade industrial water, demineralised water, cooling water and other types of water products. It also operates the Fujairah Independent Water and Power Plant in the UAE, which is one of the world’s largest desalination plants.

The Changi NEWater Plant will adopt the same technology pioneered by PUB that is used in the existing NEWater plants. NEWater is high-grade reclaimed water produced from treated used water that is further purified using advanced microfiltration/ultrafiltration and reverse osmosis membranes and ultraviolet technologies, making the water exceptionally clean and safe to drink.

Said Mr Tang Kin Fei, Group President and CEO of Sembcorp. “The Changi NEWater project is a very strategic project for Sembcorp and it marks a major milestone achieved. We are pleased that we have been selected to partner PUB in their newest and largest DBOO project and that we are able to contribute towards Singapore’s vision for water sustainability.

“Leveraging on this project and our proven track record, we are now in an even better position to seize growth opportunites in the fast-growing water sector internationally.”

The contract is not expected to have a material impact on the earnings per share and net tangible assets per share of Sembcorp Industries for the current financial year.

SembCorp Industries winds up inactive subsidiary

January 9, 2008

Sembcorp Industries wishes to announce that its inactive subsidiary, Wuxi International Management Services Pte Ltd, has been placed under Members’ Voluntary Liquidation. Mr Teo Ban Seng has been appointed as the liquidator for the company.

The voluntary liquidation of the subsidiary does not have any material financial impact on Sembcorp Group for the financial year ending December 31, 2008.

SUT and PPUto become a division of SembCorp Industries

January 1, 2008

Sembcorp Industries Ltd (Sembcorp) wishes to announce that it has entered into an internal restructuring with its wholly owned subsidiary, Sembcorp Utilities Pte Ltd (Sembcorp Utilities), for the acquisition of the latter’s SUT and Propylene Purificiation Unit (PPU) divisions. This internal restructuring is to further improve the operational efficiency and integration of the Sembcorp Group.

Under this restructuring, Sembcorp Utilities has transferred the entire assets and business of SUT and PPU, including its current employees, to Sembcorp. Furthermore, all material contracts
and agreements with customers and suppliers are to be novated, with Sembcorp assuming all rights and obligations of Sembcorp Utilities. The internal transfer of assets and business is effective from 1 January 2008, and following this, SUT and PPU are to operate as divisions of Sembcorp.

The SUT and PPU Divisions form the backbone of Sembcorp Utilities’ successful centralised utilities model in Singapore, supplying utilities services such as steam, industrial wastewater treatment, high grade industrial process water, demineralised water, cooling water, polymer grade propylene, among other utilities services to chemical and petrochemical companies on Jurong Island.

The acquisition is not expected to have a material impact on the Group’s earnings per share and the net tangible asset value per share for the current financial year.

SembCorp Industries winds up inactive subsidiary

December 26, 2007

Sembcorp Industries wishes to announce that its inactive wholly-owned subsidiary, SembWaste Cleantech Pte Ltd, has been placed under Members’ Voluntary Liquidation on December 26, 2007. Mr Robert Yam Mow Lam has been appointed as the liquidator for the company.

The voluntary liquidation of the subsidiary does not have any material financial impact on Sembcorp Group for the financial year ending December 31, 2007.

Senior Minister Goh Chok Tong leads groundbreaking for SembCorp's new industrial township in Northern Vietnam

December 11, 2007

- The project represents Sembcorp’s entry into North Vietnam, showcases its new improved integrated industrial township model

Sembcorp’s industrial parks joint venture, Vietnam Singapore Industrial Park and Township Development Joint Stock Company (VSIP JSC), hosted a groundbreaking ceremony to kick-start the construction of the Vietnam Singapore Industrial Park (VSIP) located in Bac Ninh Province, North Vietnam, this morning. Jointly developed by a Singapore consortium led by Sembcorp Parks, and Vietnam’s stateowned Becamex Corporation, the VSIP-Bac Ninh project is the third in the series of Vietnam Singapore Industrial Parks.

In the opening speech delivered by Ms. Low Sin Leng, Executive Chairman of Sembcorp Parks and Co-Chairman of VSIP JSC, she said “This time last year, we were travelling around, scouting for a site to locate our third VSIP project in Vietnam and our first in Northern Vietnam. The speedy development of this new project leading to today’s event is a best testimony of the strong support given by the Vietnam government and Bac Ninh local authorities, as well as a reflection of our confidence in Vietnam’s robust economy.”

Guests of Honour Senior Minister Goh Chok Tong and Vietnam Deputy Prime Minister Hoang Trung Hai delivered speeches and tossed the first shovels of earth as a symbolic start of construction.

Senior Minister Goh has played a key role in the VSIP’s success. Whilst the Prime Ministers of Singapore and Vietnam respectively, he and Mr. Vo Van Kiet, mooted the VSIP in 1994 as a joint collaboration between the two countries. In May 1996, both leaders broke ground for the first VSIP project in Binh Duong Province, South Vietnam.

The VSIP projects have since developed into a showcase of Vietnam-Singapore economic collaboration. In September 2006, Prime Ministers Lee Hsien Loong of Singapore and Nguyen Tan Dung of Vietnam officiated at the 10th anniversary celebrations of VSIP I and witnessed the launch of VSIP II. Having expanded from its original 500 hectares to 845 hectares currently, the parks have successfully attracted some 347 foreign as well as local manufacturing companies who have brought in more than US$2 billion worth of investments. About 75,000 jobs in the Binh Duong province will be created once all companies are fully operational by end 2008.

Now, the new VSIP-Bac Ninh project in the north will showcase the developer’s first modern industrial township in Vietnam. The industrial township model is akin to a city within an industrial park and represents an improvement over traditional industrial parks in terms of urban planning and facilities.

The 700-hectare VSIP-Bac Ninh project will contain separately zoned industrial as well as residential and commercial areas, measuring 500 and 200 hectares respectively. It will contain improved facilities such as high-rise condominium accommodation, villas, retail mall, as well as an educational institution, office buildings and banking facilities. As the first such premium industrial township in Northern Vietnam, VSIP-Bac Ninh is wellplaced to meet increasing demands for quality industrial, commercial and residential developments by international manufacturers from the electronics, electrical and pharmaceutical industries.

VSIP – Bac Ninh’s other key advantages centre around its strategic location and highway links to major facilities. Upon the completion of Highway 1B by end 2008, it will take just 15 minutes to reach Hanoi City. Noi Bai International Airport is 40 kilometres away, while the north’s deep sea Port of Hai Phong is 120 kilometres away. The closest Vietnam-Chinese border is the Lang Son-Guangxi border just 3 hours away.

“We are very excited about VSIP-Bac Ninh as it is our first integrated industrial park and township concept in Vietnam, offering a world-class manufacturing, residential and commercial environment for multi-national companies and local leading enterprises. When successfully executed, it will change the landscape of Bac Ninh Province and provide a more vibrant lifestyle for Vietnamese and foreign investors in Hanoi,” added Ms Low.

The 700 hectare VSIP-Bac Ninh is currently open for booking. Fifteen companies have already taken up 130 hectares of land for production and commercial development. Amongst these companies are the component suppliers to notable home office appliance manufacturers. VSIP-Bac Ninh will be ready for occupancy in the fourth quarter of 2008.

SembCorp Industries winds up inactive subsidiary

December 7, 2007

Sembcorp Industries wishes to announce that its inactive wholly-owned subsidiary, Sembcorp Energy Pte Ltd has been placed under Members’ Voluntary Liquidation on 7 December 2007. Mr Robert Yam Mow has been appointed as the liquidator for the company.

The voluntary liquidation of the subsidiary does not have any material financial impact on Sembcorp Group for the financial year ending 31 December 2007.

SembCorp and SPC launch Singapore's first CNG

November 21, 2007

Significant moment for Singapore’s motoring industry and motorists, move towards greener society, says NEA chief

Sembcorp Gas and Singapore Petroleum Company Limited (SPC), a member of the Keppel Group, will jointly introduce the first retail compressed natural gas (CNG) service early next year. The retail price of the CNG will be announced later.

The CNG will be supplied and retailed by Sembcorp Gas at SPC’s service station in Jalan Buroh. With this, Singapore motorists would be able to fill up their CNG tanks as easily as pumping petrol or diesel at a service station, by early next year. This will be the first CNG retail station on mainland Singapore as currently the only CNG refuelling station, which is owned and operated by Sembcorp Gas, is on Jurong Island.

Chief Executive Officer of National Environment Agency, Mr Lee Yuen Hee, said, “This is a significant development, for both our motoring industry and motorists, as CNG becomes commercially available through a retail service station for the first time. If more of such CNG retailing stations are set up across the island, it would help pave the way for more Singaporeans to opt for CNG vehicles. I congratulate SPC and Sembcorp Gas for being the first movers and in doing their part for the environment.”

SPC Senior Vice President of Marketing, Chris Keong, said, “Being an energy company, corporate social responsibility has always been fundamental in SPC’s way of doing business. We’re especially proud to be the first to offer CNG at a service station on the mainland. We continue to set the pace in the industry to expand and offer a full range of services and products across SPC’s retail network to meet the changing needs of motorists.”

Sembcorp Gas Director, Mr Francis J Gomez, said, “We are excited to extend the CNG retail service to mainland Singapore. As the first company to introduce CNG to the Singapore market, Sembcorp Gas has been a key advocate of its environmental and cost benefits. Over the next year, we intend to widen our CNG retail service to another three to four locations where piped natural gas is available. In time to come, we will also offer total packaged solutions to enable fleet operators to convert to CNG.”

Under an agreement signed between SPC and Sembcorp Gas, CNG will be retailed directly by Sembcorp Gas. The CNG facility, which is connected to Sembcorp Gas’ underground pipelines, will be owned and operated by Sembcorp Gas.

Plans are underway to widen the service across the island as CNG motoring gains acceptance. Currently there are about 350 CNG cars in Singapore, and the number is expected to grow with increasing environmental awareness.

SembCorp Gas executes heads of agreement for natural gas supply

November 17, 2007

Sembcorp Industries Ltd (Sembcorp) wishes to announce that Sembcorp Gas, a subsidiary of its wholly owned Sembcorp Utilities, has executed a Heads of Agreement with Premier Oil Indonesia on November 16, 2007, for the importation of 90 billion British thermal units (BBtu) per day of natural gas at plateau from Premieroperated Natuna Sea Block A Offshore Indonesia. Premier will be providing gas initially from the Gajah Baru discovery, with subsequent gas supply most likely from subsea developments at Naga and Iguana. This is to augment the 341 BBtu per day which Sembcorp Gas contracted for in 1999 supplied by the West Natuna Group of which Premier Oil is a member.

The gas is primarily intended to be utilised by Sembcorp Utilities for process use and production of steam to meet growing demand in the Jurong Island petrochemical complex. Some quantity of gas is also expected to be consumed by industrial and chemical customers. The gas will be piped from the West Natuna Sea through the existing West Natuna Transportation System pipeline to Sembcorp's Receiving Terminal located at Sakra, Jurong Island.

The parties have been in discussion since 2004 and a fully termed Gas Sales Agreement is expected to be concluded by the first quarter of 2008 for delivery of gas to commence in 2010.

The Heads of Agreement is not expected to have a material impact on Sembcorp's earnings per share and net tangible asset per share for the financial year ending December 31, 2007.

UK Energy Minister opens SembCorp's new Woodburning Power Station

November 12, 2007

- Sembcorp a first mover in green energy
- The first Singapore company to own and operate a biomass power plant in the UK

Sembcorp Industries (Sembcorp) marked a significant milestone today in its foray into green energy, with the official opening of a new biomass power plant in the UK. The plant will produce renewable energy using naturally sustainable wood for fuel.

UK Energy Minister Malcolm Wicks MP, who oversees energy policy in the UK including sustainability and the environment, presided over the opening ceremony for the £64 million (approximately S$193 million) Sembcorp Biomass Power Station at the Wilton International manufacturing site in Teesside in the Northeast of England.

The opening strengthens Sembcorp’s position as a first mover in green energy, as it is the first Singapore company to own and operate a biomass power plant in the UK. The plant is itself also the UK’s first large scale wood burning power station, and will use 300,000 tonnes of sustainable wood a year to generate 30 MW of electricity – enough to power 30,000 households. It is also the UK’s first totally wood-burning power plant.

Sembcorp Biomass Power Station will save an estimated 200,000 tonnes of carbon dioxide emissions a year compared with a conventional power station – the equivalent in greenhouse gas reduction terms of taking 67,000 cars off the road. The plant’s operations will also be classed as carbon neutral and will hence avail Sembcorp of unused carbon allowances to trade as carbon credits.

In addition to carbon credits, Sembcorp’s biomass power plant is also set to generate a fresh stream of revenue for Sembcorp from the power sold, as well as from Renewable Obligation Certificates (ROC’s) and Levy Exemption Certificates (LEC’s).

Mr Tang Kin Fei, Sembcorp’s Group President and CEO said, “We are greatly honoured that the UK’s Energy Minister has agreed to open our plant.

“Sembcorp is proud to take this significant step in renewable energy. We are committed to creating a greener future for our business.

“This new biomass power plant strengthens our capabilities in producing power using different fuels. With this plant, Sembcorp now has 3,382 MW of power worldwide in operation and in development.

“This investment is also in line with Sembcorp’s push to provide innovative solutions to serve our customers’ utilities needs, while delivering value to our shareholders.”

Sembcorp’s intention to build the UK’s first 100 per cent wood-to-energy power station was formally announced in March 2005. Work on the station began later that year and following commissioning, full commercial production has commenced.

The wood for the station comes from four separate sources:

a. Recycled wood - this is received, stored and chipped at the UK Wood recycling site at Wilton.

b. Sawmills – the wood comes to the site already chipped as offcuts from sawmills.

c. Managed forests - Sembcorp is working with the Forestry Commission of Great Britain and leading forestry company UPM Tilhill to utilise small roundwood logs from north east forests – items sometimes left on forestry floor after normal tree felling operations.

d. Specially grown energy crops - Sembcorp is working with farmers and other landowners locally for the supply of energy crops, specifically a type of willow known as short rotation coppice. The plant would eventually require the growth of around 7,500 acres of coppice in the region – the equivalent of around 3,000 football pitches.

All the chipped wood is mixed in careful proportions before being fed into the boiler, which encompasses technology already in use in Scandinavia and other areas.

The electricity is being sold to E.ON – the UK’s largest integrated energy company.

The opening of the plant does not have a material impact on the earnings per share and net tangible assets per share of SembCorp Industries for the financial year ending December 31, 2007.

SembCorp Industries winds up inactive subsidiary

November 7, 2007

Sembcorp Industries wishes to announce that its inactive wholly-owned subsidiary, RDC Simei Development Pte Ltd has been placed under Members’ Voluntary Liquidation on 6 November 2007. Mr Teo Ban Seng has been appointed as the liquidator for the company.

The voluntary liquidation of the subsidiary does not have any material financial impact on SembCorp Group for the financial year ending 31 December 2007.

SembCorp posts 54% growth in 9M2007 profit from continuing operations

November 6, 2007

- Group PATMI before EI increases 49% to $374.4 million

Sembcorp Industries (Sembcorp) continued to post strong earnings growth for the first nine months of 2007 (9M2007). The Group’s Profit After Tax and Minority Interest (PATMI) before Exceptional Items (EI) from its continuing operations showed an increase of 54% from the previous year, to $374.4 million. Turnover from its continuing operations was up 17% to $6.1 billion.

Strong business fundamentals continue to drive Sembcorp’s growth, backed by positive operating performance from its Utilities and Marine & Offshore Engineering businesses. Utilities’ PATMI climbed 24% to $198.0 million, contributed mainly by its Singapore and UK operations. Meanwhile, Marine’s contribution to Group PATMI increased 81% to $149.5 million, due to robust growth from rig building, offshore & conversion and repair businesses. Net order book continues to stand at a strong $7.9 billion, with completion and deliveries till 2010. Contracts worth $5.1 billion have been secured to-date this year.

“Sembcorp’s business operations remain strong. Beyond this, we continue to strengthen our overseas beachheads through our UK biomass plant as well as through new projects in China. We also see new opportunities for growth in Singapore, with positive developments in the petrochemical sector bringing a wave of potential new downstream players onto Jurong Island,” commented Mr Tang Kin Fei, Group President & CEO.

Sembcorp’s FY2007 Outlook
The Group’s businesses remain sound and have continued to perform well. We expect 2007 PATMI contribution from Utilities, Enviro and Industrial Parks to be better than that of 2006 on a comparable basis, excluding net profits arising from exceptional items.

Marine’s contribution to the Group’s PATMI will depend on the outcome of the investigation and resolution with the banks on the foreign exchange exposure relating to the unauthorised foreign exchange transactions.

Highlights from Sembcorp’s 9M2007 Financial Results

• Strong earnings growth from continuing operations
  - Turnover of $6.1bn, up 17%
  - PATMI before EI of $374.4m, up 54%
• Group PATMI before EI at $374.4m, up 49%
• Healthy balance sheet
  - Net gearing at 0.05x
  - Interest cover at 16 times
• Return on Equity (annualised) at 17%
• Positive Economic Value Added at $294.9m
  

SembCorp Industries incorporates a subsidiary in the British Virgin Islands

November 1, 2007

Sembcorp Industries (“SCI”) wishes to announce that it has incorporated a wholly-owned subsidiary in the British Virgin Island, CSE (BVI) Co, Ltd (“CSE (BVI)”) through its subsidiary, Sembcorp Gulf O&M Co Ltd.

The principal activity of CSE (BVI) is investment holding with an issued share capital of US$1 divided into 1 ordinary share.

Divestment of Sembenviro KK Asia Pte Ltd

October 31, 2007

Sembcorp Industries Ltd (the “Group”) announces that its wholly-owned subsidiary, Sembcorp Environmental Management Pte Ltd (“SembEnviro”) has divested its entire 90 per cent shareholding in SembEnviro KK Asia Pte Ltd (“SKKA”) comprising 13,500,000 ordinary shares. Following the divestment, SKKA ceased to be a subsidiary of the Group.

SKKA is in the business of recycled plastic collection, sorting, processing and manufacturing of plastic resins, as well as trading of recycled plastics.

The unaudited net liabilities of SKKA as of June 30, 2007 was $3.1 million. SembEnviro will waive its $1.2 million shareholder loan extended to SKKA and receive $0.2 million for its 90% equity shareholding in SKKA. The divestment will result in a write back of approximately $3 million. The terms of the divestment were decided on a willing buyer willing seller basis.

The divestment is not expected to have a material impact on the Group’s earnings per share and the net tangible asset value per share for financial year ending December 31, 2007. None of the directors or the controlling shareholders of Sembcorp Industries has any interest, direct or indirect, in the divestment.

SembCorp Industries winds up inactive subsidiaries

October 9, 2007

SembCorp Industries wishes to announce that its inactive wholly-owned subsidiaries, Sembawang Land Pte Ltd and Sembawang Leisure Investments Pte Ltd have been placed under Members’ Voluntary Liquidation. Mr Teo Ban Seng has been appointed as the liquidator for the companies.

The voluntary liquidation of the subsidiaries does not have any material financial impact on SembCorp Group for the financial year ending 31 December 2007.

SembCorp makes progress in growing North Vietnam market

August 13, 2007

• New customers commit to VSIP-Bac Ninh
• MOU signed to explore development of new Hai Phong township project
• Signings at Istana witnessed by Prime Ministers of Vietnam and Singapore

Vietnam Prime Minister Nguyen Tan Dung and Singapore Prime Minister Lee Hsien Loong today witnessed signing ceremonies for the Vietnam Singapore Industrial Park’s (VSIP) VSIP-Bac Ninh industrial township project as well as an Memorandum of Understanding (MOU) for a new township project in Hai Phong. The event was hosted by SembCorp’s new joint venture, Vietnam Singapore Industrial Park and Township Development Joint Stock Company (VSIP JSC), established recently in July 2007 to develop the VSIP-Bac Ninh industrial township.

New customers commit to VSIP-Bac Ninh
Ten new customers from six countries and territories signed letters of intent committing investments worth US$183.5 million to set up operations in VSIP-Bac Ninh. The investments are set to occupy 96.5 hectares of land, or 20% of the marketable area in the industrial park and township. These commitments by customers are in addition to VSIP JSC’s total investment capital of US$103.7 million to develop the 700-hectare VSIP-Bac Ninh, announced last month. The first phase of infrastructure development for this newest and third VSIP project in Vietnam will commence in January 2008.

VSIP-Bac Ninh is located at the border of Hanoi’s Gialam District and Bac Ninh Province, 18 kilometres from downtown Hanoi. The 500-hectare industrial park will be home to non-pollutive, high-tech, high value-added, capital intensive industries such as those in the electronic and pharmaceutical sectors, while the 200-hectare township will comprise commercial and residential developments as well as services to support residents of Bac Ninh province and the surrounding areas.

Ms. Low Sin Leng, Co-Chairman of VSIP JSC and Executive Chairman of SembCorp Parks Holdings, remarked “We thank our new customers for their confidence in the VSIP brand name, as demonstrated by their commitment to VSIP-Bac Ninh shortly after the announcement of the project on 9 July 2007.”

“With this latest project in Bac Ninh, VSIP has established three industrial park and township projects in Vietnam totalling 1,545 hectares. VSIP I and II have attracted 330 customers to-date, with the total investment value by customers who have received investment licenses amounting to roughly US$2 billion. These parks alone are expected to generate employment for 75,000 Vietnamese.”

“SembCorp and our partners Becamex have worked very well together to drive the VSIP projects in Vietnam. The success of VSIP has also been possible because of the tremendous support of the Vietnam political leaders and local authorities.”

MOU to explore development of new township and industrial park in Hai Phong

On the same occasion, an MOU was also signed between VSIP JSC and the People’s Committee of Hai Phong, for VSIP to explore the feasibility of developing a 1,200- hectare township and industrial park in the prime location of Hai Phong City, the third-largest city in Vietnam.

Hai Phong City has been designated for development as one of the five Grade 1 cities of Vietnam along with Hanoi in the North, Danang in the Centre and Ho Chi Minh City and Can Tho in the South. Hai Phong City is 200 kilometres from the Vietnam-Chinese border, and the exit point of two important economic corridors in North Vietnam, the first being the Kunming-Lao Cai-Hanoi-Hai Phong corridor, and the second being the Nanning-Lang Son-Hanoi-Hai Phong corridor.