Ahead of Sembcorp’s 1HFY2025 ended June 30 results, slated to be announced on Aug 8, the analysts forecast the group’s core net profit to grow by 6% y-o-y and 16% h-o-h to $566 million, boosted by the 5.5 months’ inclusion of its 30% stake in Senoko Energy.
Lim and Kande expect Sembcorp’s 1HFY2025 reported profit to also increase by 23% y-o-y and 38% h-o-h to $664 million, thanks to gains from the divestment of Sembcorp Environment (SembEnviro).
Sembcorp’s gas and related services could also deliver 26% y-o-y and 10% h-o-h net profit growth for the half year.
“We believe all eyes will be on the earnings upside expected from the 600 megawatt (MW) hydrogen-ready gas plant to be completed by FY2026 and its earnings visibility in FY2027,” the analysts say.
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Singapore’s average monthly energy prices were also comparatively lower than the same time last year, from $198/MWh in 1HFY2024 to 1HFY2025 was $122/MWh.
Only about 5% of Sembcorp Industries’ gas power portfolio would be affected by renewals at lower spark spreads, because most of its power plants are already secured under long-term contracts, the analysts note.
For FY2025 to FY2026, Lim and Kande believe that Sembcorp’s core earnings-per-share (EPS) growth of 8% to 9% per annum is “defensive”. This is attributed to its 50% higher stake in Senoko Energy, the 600MW hydrogen-ready gas plant capacity expansion in Singapore by end-FY2026, and renewable energy expansion in India and China.
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According to China’s National New Energy Consumption data, energy generated from renewable resources was restricted for the first five months of 2025 amid more wind and solar power additions. Implied curtailment for wind and solar power from January to May 2025 averaged 6.8% and 6.1% respectively, higher than the 4.2% and 3.5% over the same period in 2024.
China accounted for 64% of Sembcorp’s renewable energy, or 13.3GW worth, as of March 2025.
However, the analysts removed Sembcorp from their country high conviction pick due to its strong share price year-to-date. They recommend that the Singapore market focus on high-yield and mid-cap names in view of the interest rate environment.
The pending Singapore equity review could bring into focus names with double-digit earnings growth and valuations below book or below 10 times its forecasted earnings for FY2026, or firms with near-term corporate action, the analysts say.
Key catalysts include stronger-than-expected earnings growth, and downside risks include unfavourable regulatory changes impacting operations and prolonged plant shutdown.
At 4.30 pm, Sembcorp shares were trading at $7.72, up 1 cent.
