- Sembcorp (SGX:U96)’s 2H25 revenue declined 11% y-o-y to S$2.9b, weighed down by lower contributions from Gas and Related Services (GRS) (-14% y-o-y) and Integrated Urban Solutions (IUS) (-56% y-o-y).
2H25 PATMI missed our expectations on weaker than expected GRS contribution.
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- Sembcorp declared a final dividend of 16 Singapore cents per share, taking FY25 Sembcorp's dividends to 25 Singapore cents (+8.7% y-o-y), in line with our expectations. Management is keen to narrow the dividend payout ratio gap with its local and regional peers by raising it from the current 45% towards a targeted range of 60-70% over time.
GRS facing headwinds from lower contract renewal spreads in Singapore.
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- About 5% of Sembcorp’s portfolio and ~50% of Senoko Energy’s portfolio are due for recontracting in 2026, with new contracts currently being negotiated in the S$30-35/MWh spark spread range from the highs of S$70-80/MWh. The impact could be partially mitigated by operational and financial synergies between Sembcorp and Senoko.
- The Renewables segment was the outperformer with revenue and net profit growing 15% and 5% y-o-y in FY25, respectively. This was supported by improved wind resources in India and contributions from newly commissioned projects in Singapore and India, partially offset by higher curtailment and lower tariffs in several Chinese provinces.
Well-positioned to capture growing AI- and data-driven power demand.
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