UOB Kay Hian Private Limited
Date of Report: 6 June 2025
Sembcorp Industries: Powering Ahead with Renewables, Singapore Grids, and Hydrogen Ambitions
Overview: Sembcorp Industries’ Strategic Pivot and Growth Trajectory
Sembcorp Industries (SCI), a leading Singapore-based industrial conglomerate, is rapidly transforming into a major force in Asia’s energy transition. With businesses spanning wind, solar, conventional energy, utilities, water and waste treatment, and industrial parks, SCI has embarked on a disciplined strategy focused on sustainable growth, robust execution, and regional expansion.
UOB Kay Hian maintains a BUY rating on SCI, with a target price of S\$8.00, representing a potential upside of 20.6% from the current share price of S\$6.65.
Stock Snapshot
- GICS Sector: Utilities
- Bloomberg Ticker: SCI SP
- Shares Issued: 1,779.0 million
- Market Cap: S\$11,830.3 million (US\$9,205.0 million)
- 3-Month Avg Daily Turnover: US\$18.9 million
- 52-Week High/Low: S\$6.75 / S\$4.35
- Major Shareholder: Temasek Holdings (48.9%)
- FY25 NAV/Share: S\$3.30
- FY25 Net Debt/Share: S\$4.02
Recent Strategic Developments and Growth Highlights
- Senoko Energy Acquisition: SCI acquired up to a 57.1% stake in Lion Power, increasing its effective interest in Senoko Energy to 70%. This S\$144 million deal strengthens SCI’s influence in Singapore’s power sector.
- Long-term Renewable PPAs: A 25-year Power Purchase Agreement (PPA) with Malkoha (a Meta Platforms subsidiary) secures the sale of renewable energy from SCI’s upcoming 150MWp floating solar PV project at Kranji Reservoir, commencing in 2027.
- Major Utilities Contract: SCI will provide over S\$650 million in gas, power, and utilities to Aster Chemicals (a joint venture between Chandra Asri and Glencore) on Pulau Bukom and Jurong Island, with an MOU to pursue regional growth in Indonesia.
- Divestment of Non-Core Assets: SCI sold its SembEnviro environmental services business to Indonesia’s TBS Energi for approximately S\$405 million, representing a >43% premium over book value and NAV as of 1H24.
- Resolution of Legacy Issues: SCI settled its long-standing litigation with Universal Terminal regarding gasoil inventories, eliminating a legacy overhang.
Expanding the Clean Energy and Hydrogen Frontier
- India Renewables and Storage: In May 2025, SCI secured its second hybrid solar and storage project in India, featuring 150MW contracted solar capacity and a 300MWh battery storage facility with a 25-year offtake agreement. This increases SCI’s India renewables capacity by approximately 3% to 6.3GW, while groupwide gross renewables capacity stands at 17.7GW.
- Hydrogen and Ammonia Initiatives: A joint venture with Bharat Petroleum Corporation Limited (BPCL) is set to explore green hydrogen and ammonia production and bunkering in India.
- Regional Grid Interconnection: SCI will collaborate with Sarawak Energy and Prysmian to build a 1GW subsea interconnector cable linking Sarawak to Singapore by 2031, tapping into Sarawak’s estimated 20GW hydropower potential and diversifying Singapore’s energy sources.
Financial Performance: Robust Earnings and Healthy Margins
| Year to 31 Dec (S\$ million) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover |
7,042 |
6,417 |
6,612 |
6,976 |
7,588 |
| EBITDA |
1,609 |
1,479 |
1,574 |
1,611 |
1,736 |
| Operating Profit |
1,141 |
1,029 |
1,114 |
1,141 |
1,256 |
| Net Profit (Adjusted) |
942 |
1,011 |
1,156 |
1,130 |
1,240 |
| EPS (S\$ cent) |
52.0 |
55.8 |
62.8 |
61.3 |
67.3 |
| PE (x) |
12.8 |
11.9 |
10.6 |
10.8 |
9.9 |
| P/B (x) |
2.6 |
2.2 |
2.0 |
1.8 |
1.6 |
| Dividend Yield (%) |
2.0 |
3.5 |
3.8 |
3.8 |
4.1 |
| Net Margin (%) |
13.4 |
15.8 |
17.5 |
16.2 |
16.3 |
| Net Debt/(Cash) to Equity (%) |
141.4 |
145.5 |
122.0 |
103.5 |
87.8 |
| ROE (%) |
22.0 |
20.3 |
20.4 |
17.8 |
17.6 |
Segmental Performance and Debt Profile
- 2024 Net Profit by Segment (S\$ million):
- Renewables: 200
- Integrated Urban Solutions: 121
- Gas and Related Services: 809
- Debt Maturity Profile:
- Well-diversified across tenors with a mix of corporate, project finance, and green/sustainability-linked debt.
Upcoming Renewable Projects in Sarawak
| Project |
Capacity (MW) |
Completion |
| Baleh Hydroelectric |
1,285 |
2028 |
| Batang Ai Floating Solar |
50 |
Oct 2024 |
| Future Floating Solar Initiatives at Bakun and Murum |
160 |
NA |
Regional Peer Comparison – Utilities Sector
| Company |
Ticker |
Price (lcy) |
Market Cap (US\$m) |
PE 2024A |
PE 2025E |
PE 2026E |
P/B 2025E |
EV/EBITDA 2025E |
ROE 2025E (%) |
Yield 2025E (%) |
| CLP Holdings |
2 HK |
66.4 |
21,380 |
14.3 |
13.7 |
13.3 |
1.6 |
8.9 |
11.5 |
4.8 |
| Gulf Development |
GULF TB |
44.75 |
20,545 |
n.a. |
25.2 |
22.6 |
1.9 |
25.6 |
8.8 |
2.4 |
| Tenaga Nasional |
TNB MK |
14.2 |
19,575 |
17.5 |
17.4 |
16.3 |
1.4 |
7.5 |
7.9 |
3.6 |
| HK & China Gas |
3 HK |
7.03 |
16,718 |
23.0 |
20.9 |
19.9 |
2.3 |
15.2 |
11.0 |
5.0 |
| China Longyuan |
916 HK |
6.71 |
14,450 |
8.0 |
7.4 |
6.8 |
0.7 |
9.5 |
8.8 |
3.9 |
| Power Assets Holdings |
6 HK |
52.25 |
14,191 |
18.2 |
17.5 |
16.7 |
1.3 |
n.m. |
7.3 |
5.4 |
| Huaneng Power |
902 HK |
5.04 |
14,046 |
10.0 |
6.7 |
6.2 |
0.7 |
9.0 |
9.8 |
7.2 |
| Tokyo Gas |
9531 JP |
4,742 |
12,283 |
24.7 |
11.9 |
13.1 |
1.0 |
6.4 |
8.2 |
1.8 |
| Origin Energy |
ORG AU |
10.58 |
11,860 |
13.0 |
12.2 |
16.7 |
1.9 |
6.4 |
15.7 |
5.6 |
| Osaka Gas |
9532 JP |
3,625 |
10,068 |
10.9 |
10.5 |
10.4 |
0.9 |
7.6 |
8.0 |
2.9 |
| AGL Energy |
AGL AU |
10.39 |
4,548 |
9.8 |
10.4 |
10.5 |
1.3 |
4.6 |
12.3 |
5.1 |
| Perusahaan Gas |
PGAS IJ |
1,840 |
2,739 |
8.1 |
8.1 |
8.1 |
1.0 |
3.7 |
10.6 |
8.9 |
| Sembcorp Industries |
SCI SP |
6.65 |
9,205 |
11.9 |
10.6 |
10.8 |
2.0 |
12.4 |
20.4 |
3.8 |
Valuation and Share Price Catalysts
- Target Price: S\$8.00 based on a PE multiple of 12.6x (1.5 standard deviations above the 2018–25 average PE of 8.2x, excluding 2020’s impairment losses).
- Key Catalysts:
- Successful execution of renewables expansion targets, both organically and via acquisitions.
- On-time, on-budget delivery of the 600MW hydrogen-ready co-generation plant in Singapore.
- Effective capital recycling in the energy portfolio.
Key Metrics and Financial Ratios
| Year to 31 Dec (%) |
2024 |
2025F |
2026F |
2027F |
| EBITDA Margin |
23.0 |
23.8 |
23.1 |
22.9 |
| Pre-tax Margin |
19.4 |
21.0 |
19.7 |
19.9 |
| Net Margin |
15.8 |
17.5 |
16.2 |
16.3 |
| ROA |
6.0 |
6.3 |
6.0 |
6.3 |
| ROE |
20.3 |
20.4 |
17.8 |
17.6 |
| Debt to Total Capital |
60.5 |
57.9 |
55.2 |
52.6 |
| Debt to Equity |
161.7 |
145.0 |
129.8 |
116.4 |
| Net Debt/(Cash) to Equity |
145.5 |
122.0 |
103.5 |
87.8 |
| Interest Cover (x) |
4.3 |
4.5 |
5.3 |
5.7 |
Conclusion: Sembcorp’s Investment Case Remains Robust
Sembcorp Industries stands out as a scalable, strategically positioned platform for Asia’s energy transition, balancing disciplined growth in renewables with a stronghold in conventional energy. With multiple long-term contracts, regional expansion, a healthy financial profile, and a clear focus on delivering value through decarbonisation and energy resilience, SCI is set to power ahead as a leader in the region’s evolving energy landscape.
