Sembcorp reported a disappointing set of 1H25 results. Core profit came in at S$491mil (excludes divestment gains of S$140mil (mainly waste business) and forex loss of S$95mil for Deferred Payment Note (DPN) in India), falling short of our ~S$550mil estimate by 10%.
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Gas & Related Services saw earnings fall by 15% y-o-y, or ~S$60mil to S$330mil.
We understand that this was attributable to moderation of power spreads for contract renewals, absence of one-off high margin gas trading contracts due to curtailment, and loss-making renewable imports from Malaysia.
The impact of moderating spark spreads (~6% of group profit) was more pronounced in 1H25 due to higher recontracting (10% from end 2024 to early 2025) of exceptionally high margin contracts locked in during 2022/23. The impact should ease gradually, with only 13% of contracts expiring over next 5 years (3% in 2026). Spark spreads in the recent batch of recontracting were lower.
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Renewable and Integrated Urban Solutions were in line, with net profit growing 22% and 14% y-o-y to S$138mil and S$80mil respectively.
Renewables in Vietnam:
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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/.
