Sembcorp Industries - Likely To Up 2025 Target Of 10GW Renewable Energy Capacity
- Sembcorp Industries (SGX:U96)’s 49%-owned JV Beijing Energy Sembcorp is acquiring 100% equity interests in three solar projects, with a total gross capacity of 795MW, from BEI Energy Development (BEI). See Sembcorp's announcement dated 11 Nov 2022 – The assets are contracted to the State Grid Corporation of China, a Chinese state-owned electric utility and grid operator, for 3 to 5-year power purchase agreements (PPA).
- Sembcorp is also acquiring a 100% equity interest in Indian independent power producer Vector Green from India Infrastructure Fund II for a consideration of INR27.8bn (~S$474m). See Sembcorp's announcement dated 13 Nov 2022 – Vector Green’s portfolio includes 495MW of solar and 24MW of wind capacities in operation, and 64MW of solar capacity under development.
- With Vector Green, SCI’s Indian wind/solar portfolio will be rebalanced to ~35%/65% to cushion low-wind seasons. Vector Energy’s assets are on long-term PPAs, with ~19 years remaining.
- With these two acquisitions, Sembcorp’s total gross renewable capacity is increased to ~8.5GW (~3.1GW solar, ~5.0GW wind, and ~0.3GW energy storage), including work-in-progress assets, very close to its 10GW target by 2025F. We think expansion momentum into renewables is likely to remain unabated and Sembcorp is likely to communicate a higher target plan in 2023F.
- We estimate the above acquisitions to add ~7-8% to our FY24F EPS forecast for Sembcorp.
- Reiterate ADD rating on Sembcorp with a target price of S$4.78, based on 12x CY23F P/E, which is a 20% discount to regional utilities peers’ of 15x CY23F P/E.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
LIM Siew Khee CGS-CIMB Research | Izabella TAN CGS-CIMB Research | https://www.cgs-cimb.com 2022-11-14 2022-11-14
Read also CGS-CIMB's most recent report:
2022-11-18 Sembcorp Industries - Acquiring More Solar & Wind Assets For ~s$204m
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