The analyst’s optimism is fuelled by the imminent completion of Sembcorp’s acquisition of Alinta Energy, an Australian electricity generator and gas retailer. To recap, Sembcorp announced that it had entered into an agreement to purchase Alinta for an enterprise value of A$6.5 ($5.6) billion in December 2025.
Loh expects the Alinta deal to be completed by the end of 1H2026. He points out that the acquisition is earnings accretive immediately, with pro-forma earnings per share for the 12 months to end 1HFY2025 rising by 14% to $0.65 and return on equity rising to 22.5% from 19.7%. Incorporating Alinta’s 3.4GW of installed and contracted generating assets into Sembcorp’s earnings, Loh estimates Sembcorp’s earnings to rise by 16-25% for FY2026 to FY2028.
The way Loh sees it, the expansion into the Australian market rebalances Sembcorp’s geographic risk profile as Singapore and the UK combined represented just 28% of attributable capacity with OECD markets increasing to 37% of capacity and 64% of underlying net profit post-acquisition. He believes Australia’s stable regulatory environment, strong rule of law, and transparent energy market structures enhances the resilience and sustainability of the company’s portfolio.
Loh is also upbeat about Alinta’s performance. He points out the company leads its peers with 2024 ebitda margin at 19% while being structurally long in generation capacity with volumes sold exceeding generation output by 5.5 TWh in 2025. For him, Alinta is well-positioned for Australia’s energy transition due to its 10.4GW development pipeline which is skewed towards battery energy storage solutions (BESS) and wind.
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In the near-term, this development pipeline will add 33% of capacity or 2.2 GW of gas, wind and BESS to Sembcorp’s development pipeline of 6.6 GW. Longer-term, Alinta will contribute 8 GW to Sembcorp’s pipeline of 69 GW, taking total development options to 78 GW globally. Given Australia's energy transition and Alinta's existing assets which include transmission and grid proximity, Loh believes the renewable optionality is strategically significant by lowering execution risk.
From his perspective, Alinta’s coal-fired Loy Yang B powerplant has transformed from a liability into an asset in light of the energy crisis. With the Strait of Hormuz being “blocked” limiting exports of oil and gas, coal has become the primary bridge fuel substituting oil and LNG imports across Asia.
Thus, as one of the lowest-cost coal generators with its short-run marginal cost of power generation at just A$22/MWh, Loy Yang B offers reliable, price-competitive baseload generation and is now seen as a dispatchable baseload asset, presumably a critical component of Sembcorp’s portfolio.
Valuing Sembcorp at 11.8 times of P/E or one standard deviation above the company’s three-year average of 8.9 times, UOBKH calculates the counter to be worth $8.06 based on forecasted FY2027 earnings per share.
