<News Alert> 1H22 earnings blew past our estimate
Sembcorp Industries (SCI)’s 1H22 earnings blow past estimates. Net profit of S$490m made up 93% of our 5%-above-consensus full year forecast. The astounding performance was driven by the Conventional Energy segment, especially in Singapore and India that saw spikes in tariffs and spreads. This was further boosted by gains from forex and gas contract hedges as well as settlements with customers totalling S$111m.
SCI declared an interim dividend of 4 sct (vs 2 sct in 1H21), translating dividend yield of ~1.3%. There is upside to street expectation on DPS at ~6 S cts.
Gross renewable capacity has grown to 7.1GW as of end Jun-22, from 6.1GW end last year. Renewable profits surged 138% hoh to S$76m in 1H22, thanks to accretion from acquisitions in 4Q21. Renewable segment now accounts for 16% of group headline profit.
Maintain BUY; lifted slightly to TP S$3.80. We will review our earnings to reflect the much stronger than expected 1H.
