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Why analysts are preferring Sembcorp over Keppel


The former has a stronger operating margin compared to its rival.

Following a challenging quarter for Singapore shipyard firms, analysts at UOB Kay Hian are laying their bets on Sembcorp Industries, preferring it over its rival Keppel Corporation.

According to Andrew Chow, Sembcorp met analysts' expectations as better earnings from Singapore utilities and gas helped offset continued losses in India.

All eyes are on group's strategic review which is expected to take place in late-17, with details available in early-18.

Meanwhile, the group's marine arm's 2Q17 actually exceeded our expectations due to strong core operating margin of around 10%, comparable with 2Q16’s.

"We believe the improved margin was likely due to stronger contribution from the repair & upgrades segment," Chow said.

This is against Keppel which continued to disappoint as O&M contributions were below expectations.

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