Sembcorp (SGX:U96) reported strong FY24 results with core net profit of S$1.02bn (flat y-o-y), 5% ahead of ours and consensus’ estimates. The steady performance despite a major plant shutdown for maintenance in 2Q24 (loss of income of ~S$50mil) is commendable.
FY24 results ahead with dividend surprise
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Results were also aided by a forex gain of S$10mil for the SEIL Deferred Payment Note (DPN) vs expectations of a small loss of S$30-40mil.
Management raised the dividend payout to 40% (from 20-25% previously) for FY24 to reward shareholders with higher yield. The final dividend of 17 cents brings the full year Sembcorp's dividends to 23 cents per share, implying ~4% yield.
Gas & Related Services growth outlook lifted, new growth markets for Renewable
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Earnings growth target for Gas & Related Services segment was raised to >5% CAGR during 2022-2028 (from -2% CAGR previously) considering the earnings accretion from Senoko acquisition, steady earnings for Singapore power assets and potential organic growth / acquisition opportunities.
The current CEO of China Renewables will drive expansion into the markets in SEA in particularly Indonesia, Vietnam and Philippines.
Potential Capital Recycling?
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
