Based on pro-forma earnings ended 31 December 2024, Krishna reports that the Alinta deal will be around 9% accretive for patmi. He notes that debt will stay within “comfort range” for the company, with gearing — net debt to adjusted ebitda — rising from 3.6 times to 4.6 times.
The analyst points out the benefits of the acquisition including diversification into an AAA-rated country with “regulatory certainty”, presumably referring to Australia’s renewable energy commitment. He also notes Alinta’s “high-quality” assets including imminent renewables projects and mentions SCI’s commitment to maintaining a dividend payout of 23 cents.
While Krishna likes the Alinta deal, he expresses concerns including execution risks, higher debt load, softening power prices in Singapore, regulatory risks and incongruent demand-supply for overseas energy markets.
Amongst various analysts covering the counter, his new target price seems to be the most cautious, being the only forecast to be below SCI’s current trading price, in contrast to other reports from Phillip Securities and JP Morgan and CGI Singapore.
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In a previous October analysis, Phillip Securities head of HQ dealing team Chua Minghan points out that SCI could risk overpaying for acquisitions as it tries to achieve its aggressive target of 25 GW of renewables capacity by 2028.
SCI shares were trading at $5.90 on Dec 17 at around 11.40am, two cents or 0.3% down from the previous day.
