On 8 Nov, Sembcorp announced sale of SembEnviro, a waste management services provider, for S$405m, at a 43% premium over book value. Sembcorp will use the sales proceeds to invest further in the energy business to achieve the 2028 strategic roadmap.
- Read this at SGinvestors.io -
Waste to energy
A wholly owned subsidiary of PT TBS Energi Utama (TOBA IJ) will acquire 100% of the business from Sembcorp. The sale price has been arrived at on a ”willing buyer, willing seller” basis and will expand the buyer’s regional waste management platform in Indonesia and Singapore as it undergoes the green business journey for its diverse business portfolio.
We believe part of the proceeds may be used to finance the purchase. Based on pro-forma disclosures, the transaction will be 3.4% accretive to NTA and 13.4% to EPS. This includes divestment gain of S$114m. Excluding the gains and factoring in financing savings, we estimate ~4-5% earnings accretion.
Further, Sembcorp had announced in the 1H results the cessation of the public cleaning contract for the Central-North region from end-Sep 2024. As such, the proposed sale should mitigate any adverse business impact from the non-renewal of the contract.
Maintain BUY
Read more at SGinvestors.io.
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