By Robin Chan

YOU can take Sembcorp out of Sembawang, but you cannot, it seems, take Sembawang out of Sembcorp.

A dozen years on, people still get confused about the names after Sembawang Corp and Singapore Technologies Industrial Corp (STIC) joined forces in 1998 to become behemoth Sembcorp Industries.

The group gets phone calls asking about unrelated Sembawang Music and Sembawang Engineers and Constructors - a former Sembcorp unit sold to Indian energy group Punj Lloyd in mid-2006.

Group president and chief executive Tang Kin Fei acknowledges there is some lingering confusion, while emphasising that Sembcorp is a name in its own right.

'I wouldn't say Sembawang is a good name or a bad name, just that the branding, unfortunately, is still there.'

But he is unequivocally proud of the way the group's business portfolio has changed spectacularly - and grown.

In just over 12 years, Sembcorp has undergone a dramatic makeover of a rare magnitude. It has been transformed from an unwieldy conglomerate with a finger in almost every pie into a leaner group with a steady focus on marine, utilities, waste management and industrial parks.

The makeover has not been perfect. Sembcorp still struggles to get investors to understand what it does and to appreciate its true potential, Mr Tang told The Straits Times in a recent interview.

Perhaps the fault lies, in part, in the far-flung and somewhat unglamorous nature of some of its big contracts.

In the past two months alone, Sembcorp has launched two mega projects in the fast-growing centres of Vietnam, where it is building a new industrial township, and Oman, where the ground-breaking ceremony for a water and power plant was held just last week.

Now that Sembcorp has a presence in 10 countries, with numerous projects only now maturing, Mr Tang is convinced that growth is here to stay.

But first, people have to stop calling the group Sembawang.

To understand the fuss over this name, one has to turn back the clock.

Back in 1998, a wave of mergers swept through Singapore's business landscape amid a drive to dominate the region with a bevy of large home-grown corporations.

At least three high-profile deals were done that year, including DBS Group Holdings' buyout of POSBank and the formation of Keppel-Tat Lee Bank, later sold to OCBC Bank.

The third was the merger of engineering firm Sembawang with STIC to form Sembcorp Industries. The deal took nine months, driven by two high-profile directors in Ms Ho Ching at STIC and Mr Philip Yeo at Sembawang Corp, and accelerated by the deteriorating economic conditions during the Asian financial crisis.

The new entity became South-east Asia's No. 1 civil engineering and building construction group, with total annual turnover of $3.3 billion and 16,600 staff at the time of the merger. It boasted businesses with more than 300 units and joint ventures.

'After the merger, we had too much breadth, so we thought we should narrow our focus to give ourselves more attention to drive our growth forward,' said Mr Tang, a 23-year veteran of the company, who became its CEO in 2005.

The late Mr Wong Kok Siew, its CEO from 1998, eventually whittled down a long list of businesses as the group determined that infrastructure, marine engineering, information technology and lifestyle would be the core of the new entity.

The businesses it jettisoned included property development, financial services, cruise and shipping operations, retail of consumer goods and food, travel and hotels, health care, cineplexes and even a pig farm. Among those tossed overboard: Delifrance, Junction 8, Singapore Food Industries, and Pacific Internet.

Eight years later, by mid-2006, Sembcorp had sold the last of those businesses, effectively marking the end of the era of consolidation, Mr Tang said.

He led the sale of the two largest parts of Sembcorp in 2006: its logistics and engineering assets. The total price all the divestments fetched was over $4.3 billion.

'We have been in the same structure in terms of our core since 2006,' he said from his office in the group's headquarters in Hill Street.

Were there ever any regrets over selling so many parts of the company?

Mr Tang said some people still ask him why certain businesses were sold, but he sees no point dwelling on the past.

'In business, there is no such thing as right or wrong. We agree on a decision and we move forward with a clear direction, a clear mission forward.'

Despite the 'historical baggage' of the Sembawang name, and the attendant confusion, Mr Tang is confident of the group's prospects.

To drive home the point, he flips to page two of the group's key facts and figures booklet, which he takes with him everywhere. 'The rationalisation of our businesses has made us more focused, resulting in a very steady performance over the years,' he said, citing figures.

Group annual turnover hit $9.9 billion in 2008, with a five-year compounded annual growth rate of 17 per cent.

In the third quarter of last year, amid the global recession, Sembcorp reported a 2 per cent rise in net profits, showing that the new business focus can withstand economic fluctuations, Mr Tang said.

'(The consolidation)... gives us growth and stable, recurring income.'

The perception that Sembcorp is not very sexy is due in part to its business profile, which analysts say is more muted than that of conglomerates such as Keppel Corp or ST Engineering.

Sembcorp's listed marine unit Sembcorp Marine has also overshadowed the rest of the group with its strong performance. 'The marine business is where the growth is coming from,' said DBS Vickers analyst Chong Wee Lee. 'On the utilities side, they are trying to expand overseas but it takes time to establish it.'

Mr Tang, who came from the company's utilities division, attributes the low profile to the public not having a clear enough understanding of the business.

Investors in a utilities company must understand that it is a marathon and not a sprint, he said. It takes many years before profit is realised in utilities, but after that the income is stacked on when new projects are gained because each project can last from 15 to 50 years.

He often drops the reminder that Sembcorp put its first dollar of investment in utilities only in 1995. That it now contributes over 40 per cent to group revenue gives him great satisfaction.

The problem is that most investors have short-term appetites, while utilities involves 15- to 20-year cashflows, said CLSA analyst Ashwin Sanketh. 'The average investor's time horizon is six months, so that isn't going to be very attractive.'

The solution, Mr Tang said, may be to target a specific investor profile, like pension funds, that goes for long-term, stable returns. And while words like 'steady' and 'consistent' may not set hearts racing, he is happy with Sembcorp's direction and core businesses for now. 'I will not preclude anything that comes along the way...but within these key areas there is already plenty to do.'

This article was first published in The Straits Times.