Sembcorp Profits Jump on Solid Renewables Portfolio

Sembcorp Industries Ltd (SG:U96) posted a 16% year-over-year jump in the net profit for the second half of Fiscal 2023, backed by solid performance from the Gas and Related Services and Renewables segments. The company’s diluted earnings per share (EPS) of S$22.76 came in much higher than the prior-year period figure of S$19.66 per share. The investment holding company reported higher earnings despite a 14% year-over-year decline in its second-half revenue to S$3.38 billion owing to reduced oil and gas prices. However, the top line gained from higher sales in the renewables segment.

Further Details About Sembcorp’s Results

Singapore-based Sembcorp boasts a diversified renewables portfolio spanning wind, solar, and energy storage across Asia, the U.K., and the Middle East. The company is optimistic about its outlook due to the strength in the renewables segment, backed by greenfield projects and brownfield acquisitions.

For the full year ending December 31, 2023, Sembcorp’s net profit from continuing operations before Exceptional Items (EI) grew 38% to S$1.0 billion. Higher power prices in Singapore and solid renewables assets in China and India led to improved profits for Fiscal 2023. In contrast, full-year revenue fell 10.2% to S$7.04 billion.

Based on the strong earnings, Sembcorp’s board proposed a final dividend of S$0.08 per share, boosting the full-year dividend to S$0.13 per share.

Is Sembcorp Industries a Good Stock?

Ahead of Sembcorp’s full-year results, Macquarie analyst Foo Zhi Wei lifted the price target on U96 shares to S$7.40 (28.7% upside) from S$7.10 while reiterating a Buy rating.

With two Buy ratings received in the past three months, U96 stock has a Moderate Buy consensus rating on TipRanks. The Sembcorp Industries Ltd share price forecast of S$7.30 implies 27% upside potential from current levels.

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