📈 Sembcorp Surprises with Dividend Hike & $1B Net Profit
Sembcorp Industries has entered a “new normal,” delivering $1.01 billion in adjusted net profit for FY2024, marking a 7% year-on-year (y-o-y) growth and surpassing analyst expectations. In a surprise move, the company announced a higher dividend of 23 cents per share, up from 13 cents in FY2023, with a 40% payout ratio, signaling strong cash flow across its business segments.
💡 Gas Business Remains Core, But Renewables Gain Traction
Sembcorp’s gas and related services segment reported a 10% y-o-y decline in net profit to $727 million, mainly due to a 34% drop in Singapore’s wholesale electricity prices. However, the company highlighted long-term offtake contracts covering 99% of its Singapore gas-fired capacity, ensuring stability.
Sembcorp also acquired a 30% stake in Senoko Energy in November 2024 and plans to expand its 600MW hydrogen-ready power plant in Singapore by 2026, boosting future earnings.
⚡ Renewables Expansion: Eyeing 35GW Capacity
Sembcorp’s renewables segment, though still smaller than its gas business, is rapidly scaling up. The company is now targeting up to 35GW in renewable capacity, higher than its previous 25GW target by 2028.
Key developments:
- East Markets (China & Southeast Asia): Led by Alex Tan, covering wind and solar in Vietnam and energy storage in Indonesia.
- West Markets (India & Middle East): Managed by Vipul Tuli, with a focus on India’s solar farms and an 80% stake in a 500MW solar plant in Oman.
- Total Secured Capacity: 4.1GW added in 2024, bringing installed capacity to 13.1GW and a total 17GW including projects under development.
🏗️ Urban Solutions Drive 40% Profit Growth
Sembcorp’s Integrated Urban Solutions (IUS) segment delivered 40% y-o-y net profit growth to $169 million, driven by higher land sales in Vietnam & Indonesia. The company has also expanded its industrial land bank to 14,400ha for low-carbon industrial parks and is adding 508,000 sqm of industrial space.
Additionally, the sale of its waste management unit, Sembcorp Environment, to Indonesia’s TBS Energi Utama for $405 million is set to close in 1H2025, generating a gain of at least $100 million.
💰 Analysts Raise Target Prices Amid Bullish Sentiment
Following Sembcorp’s strong results, analysts revised their target prices upward:
- UOB Kay Hian: $8 (previously $7.47) – Maintains “Buy” rating.
- DBS Group Research: $8 (from $7.38) – Calls dividend a “surprise.”
- OCBC Investment Research: $7.20 (previously $6.70).
- Maybank Securities: $7.10 (from $6.20).
Sembcorp’s stock jumped 5% post-results, adding to its 25% rise over the past year and a massive 250% surge in the last five years.
🔮 Sembcorp’s Future: Bigger, Faster, Stronger
CEO Wong Kim Yin is confident about Sembcorp’s trajectory, emphasizing its strong earnings visibility, ambitious renewables expansion, and disciplined capital allocation. “We have entered a new phase—a ‘new normal’—where we aim for faster and deeper growth while delivering sustained value to shareholders,” he stated.
🚀 With its aggressive shift toward renewables and a solid cash-generating gas business, Sembcorp is poised for further growth in the years ahead.
Thank you
