Why Sembcorp is poised to deepen revenue cuts

This will be due to its operations in India.

Sembcorp Industries' headline losses for India operation is expected to be higher in the past quarter than in 1Q17, UOB Kay Hian analysts Foo Zhi Wei and Andrew Chow said.

The two analysts said this could be due to a one-off refinancing charge. It will be refinancing the loans on Sembcorp Gayatri Power to a lower interest rate, which should have been completed in the past quarter. The full charge is estimated at $30m, of which $5.2m was already booked in 1Q17.

However, the analysts said, excluding the one-off refinancing charge, core losses for India should be lower than in 1Q17.

"Better operational performance at SGPL, coupled with earnings contributions from both units (instead of one unit in 1Q17, Unit #4 started in March), should see SGPL’s quarterly loss decline 20-25% qoq. Marginally higher earnings from TPCIL and Sembcorp Green Infra (SGI) entering the high wind season should help India narrow its losses in 2Q17," they noted.

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