Sembcorp Industries (SCI) is a Singapore-based industrial conglomerate with business interests in: 1) utilities (primarily on electricity generation and wastewater treatment); 2) offshore/marine through its 61%-owned subsidiary Sembcorp Marine; and 3) urban development (developing industrial parks). SCI is 49.55%-owned by Temasek (AAA/Aaa), a government-owned holding company that has equity stakes in several strategic companies in the country. Investment Rationale : We rate SCI as BBB with one notch uplift from the potential support from Temasek. The rating is underpinned by its strong track record in utilities and marine business. SCI’s urban development segment, though small in comparison to the utilities and marine arms, possesses growth potential with its focus on emerging markets. Utilities business is stable in nature. Nevertheless, Singapore energy segment is facing headwind due to the oversupply situation. Outlook for marine business is also dim driven by prolong low oil prices. SCI’s credit metrics is deteriorating due to high capex amidst rising working capital needs, and weaker earnings outlook. Name YTM Recommendation SCISP’17 (SGD): 2.10% Underweight SCISP’20 (SGD): 3.14% Underweight SCISP’21 (SGD): 3.48% Market weight SCISP’24 (SGD): 3.64% Underweight SCISP’25 (SGD): 3.87% Underweight SCISP’26 (SGD): 3.70% Underweight SCISP 5.0% Perps-18 (SGD): 4.34% Underweight SCISP 4.75% Perps-20 (SGD): 4.62% Underweight Credit Risks • High capital