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:
Shenzhen Huiyang New Energy (HYNE), and
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 an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
