- Downgrade Sembcorp to HOLD as it appears fully valued, and we see downside risk to earnings. We lowering FY25-26 core profit by ~2-5% accordingly, and cut Sembcorp's target price to S$6.40 from S$7.10, applying a lower P/E of 12x from 14x. However, core income remains resilient helped by new operational capacity in renewables.
Higher interim dividend.
- - Read this at SGinvestors.io -
- - Read this at SGinvestors.io -
Growing renewables, slowdown in gas and sales.
- 1H25 turnover of S$2.9b fell 8% y-o-y, led by 10% fall in turnover in gas and related services due to lower spreads of renewed contracts in Singapore, higher cost of green power imports and absence of revenue from Semb Enviro. This was partly offset by 16% y-o-y increase in turnover from renewables, led by new capacity and higher wind resources in India, partially offset by increased curtailment and lower tariffs in China.
- Share of profit from Sembcorp's associates & JVs rose 35% y-o-y due to 50% stake acquired in Senoko Energy and higher land sales in Vietnam and Indonesia.
- Sembcorp suffered an adverse FX translation impact of S$23m due to a stronger S$.
Strengthening of recurring earnings.
- Read more at SGinvestors.io.
