Sembcorp Industries: Leading the Green Energy Transition

Sembcorp Industries (SCI) continues to solidify its position as a leader in renewable energy and sustainability. Recently trading at \$5.63 with a minor increase of \$0.07, SCI has been actively expanding its global footprint.

Green Hydrogen Project in Odisha

SCI, through its subsidiaries Sembcorp Green Hydrogen India Private Limited (SGHIPL) and Sembcorp Development Ltd, has signed two non-binding Memoranda of Understanding (MOUs) with the Government of Odisha, India. These MOUs focus on developing a green hydrogen production facility with an anticipated annual production capacity of 720,000 metric tonnes. This project is set to create over 2,000 jobs during its operational phase and will play a pivotal role in India’s low-carbon transition.

Industrial Park Development

SCI is also exploring the development of an industrial park in Odisha, further aligning with Singapore and India’s bilateral collaboration on sustainability. While these initiatives are not expected to materially impact earnings for the fiscal year ending December 31, 2025, they underscore SCI’s long-term commitment to sustainability.

Oman Solar Project

SCI recently completed its Manah II Solar Independent Power Project in Oman ahead of schedule. This 588MW solar farm is SCI’s largest utility-scale solar project globally and is backed by a 20-year 500MW power purchase agreement. The project is expected to significantly contribute to Oman’s target of 30% renewable energy by 2030 and boost SCI’s earnings per share.

India’s Solar and Battery Hybrid Project

SCI has also been awarded a 150MW solar photovoltaic project coupled with a 300MWh Battery Energy Storage System (BESS) by the Solar Energy Corporation of India Ltd (SECI). This marks SCI’s first solar and BESS hybrid project in India, which is expected to be operational within 24 months, further bolstering its renewables capacity to 16.5GW globally.

Recommendation

With an undemanding forward PE of 10x and a consensus one-year target price of \$6.80, SCI offers a 20% upside potential. Analysts maintain an “Accumulate” rating, citing the scarcity premium for green and sustainable investments.

Marco Polo Marine: Positioned for Offshore Wind Energy Growth

Marco Polo Marine (MPM), trading at \$0.055, is strategically expanding its presence in the offshore wind energy sector. The group aims to capitalize on the increasing demand in Asia, particularly in China, Taiwan, Korea, Japan, Vietnam, and the Philippines.

Fleet Modernization and Offshore Wind Expansion

MPM’s fleet includes newly built vessels designed with state-of-the-art green technology, such as hybrid battery-based energy storage systems that reduce carbon emissions by 15%-20%. These vessels are also future-proofed for methanol fuel usage, ensuring low-carbon operations.

Ship Repair Services

Despite initial challenges posed by the reopening of Chinese shipyards, MPM’s dock utilization for ship repair services reached 91% in FY2024, up from 84% in FY2023. The construction of Dry Dock 4 is expected to further enhance its ship repair capabilities.

CSOV Delays and Recovery

MPM’s Commissioning Service Operation Vessel (CSOV) faced delays due to labor shortages and regulatory requirements. However, the vessel is now in its final stages and is slated for completion by February 2025. This project, although internally funded, has temporarily reduced the group’s revenue-generating capacity.

Financial Performance

Despite a revenue decline in FY2024, MPM reported a 6% increase in gross profit and a 4% rise in adjusted net profit after tax, highlighting its operational resilience. The company is also addressing discrepancies in its financial statements to strengthen internal controls and accuracy.

Recommendation

With a market cap of S\$207 million, MPM trades at 8x forward PE and 1.1x PB, offering a 42% upside to the consensus target price of 7.8 cents. Analysts recommend an “Accumulate on Weakness” strategy, highlighting stable charter rates and increased ship repair activities.

Other Key Highlights from the SGX Market

Institutional and Retail Fund Flows

For the week of January 6, 2025, institutional investors reported a net buy of S\$21.2 million, reversing a net sell of S\$130.9 million from the previous week. Retail investors recorded a net buy of S\$55.3 million, compared to a net sell of S\$49.8 million earlier.

Dividend Announcements

Several companies, including Frasers Property Ltd, PNE Industries Ltd, and Jumbo, announced their dividend schedules. Notably, BRC Asia will distribute an 8-cent final dividend and a 6-cent special dividend in April 2025.

SGX Watch-List Updates

The SGX watch-list now includes 32 companies, with recent additions such as Addvalue Technologies, Renaissance United, and Global Invacom Group.