Following a visit to Sembcorp Industries’ (SCI) Tengeh floating solar farm on Nov 17, CGS-CIMB Research analyst Lim Siew Khee has reiterated her “add” call for the company with an unchanged target price of $2.51.
In a research note released the same day, Lim notes that the 60 megawatt-peak (MWp) farm, which is owned and operated by SCI, is the largest floating solar farm in Singapore, with 122,000 solar panels spanning 45 hectares.
The solar farm officially opened on Jul 14 in partnership with the National Water Agency Public Utilities Board. “Electricity generated from the floating solar farm will power Singapore’s five local water treatment plants, offsetting [around] 7% of PUB’s annual energy needs,” she notes.
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The farm is part of the 390MWp worth of solar energy projects SCI has in Singapore, including those still under development.
The way Lim sees it, the farm is a positive indicator for SCI’s shift towards renewable energy assets. “We like SCI’s execution on greening its assets so far,” she remarks.
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SCI has allocated some $4.4 billion towards renewable projects, or 80% of its five-year, $5.5 billion investment target.
As a renewable energy proxy in Singapore, Lim points out that SCI is trading at an undemanding valuation compared to Sunseap, which owns the only other commercial floating solar farm in Singapore. SCI is currently trading at an FY2022 ending December EV/EBITDA of eight times, compared to Sunseap’s recent acquisition by EDP Renewables which saw it valued at an EV/EBITDA of 31 times.
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SCI is also among CGS-CIMB’s mid-cap environmental, social and governance (ESG) picks.
As at 10.26am, SCI shares are up 1 cent or 0.49% higher at $2.04.
Photo: Sembcorp Industries
