Sembcorp Industries - UOB Kay Hian 2023-02-22: Strong 2022 Results With Both Energy Segments Continuing To Outperform

• Sembcorp reported stronger-than-expected net profit for 2022 with the highlights being its conventional energy segment as well as contribution from its new renewable assets in China.
• In our view, Sembcorp is likely to undertake more M&As in the renewables space in 2023 as it has S$3.7b to capitalise on such opportunities – this could drive share price performance.
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Sembcorp's 2022 earnings above expectations.

• Sembcorp Industries (SGX:U96) reported better-than-expected 2022 results with revenue from continuing operations up 22% y-o-y and net profit from continuing operations (before exceptional) up nearly 4-fold to S$727m. See Sembcorp's announcement dated 21 Feb 2023. The robust y-o-y performance was due to the renewables and conventional energy business segments, both of which registered >100% y-o-y net profit increases.
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• Renewables segment the key highlight. Net profit before exceptional items for the Renewables segment jumped 150% to S$140m on the back of Sembcorp’s new acquisitions, namely:
  1. Shenzhen Huiyang New Energy (HYNE), and
  2. 35%-owned SDIC New Energy.
• In addition, higher power prices for the company’s solar assets boosted its renewables’ bottom line.
• To recap, Sembcorp acquired 3.6GW of renewables capacity through acquisitions and organic growth across key markets, resulting in 9.8GW of renewables capacity as at end-22.

High but manageable debt levels.

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Above is the excerpt from report by UOB Kay Hian Research.
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