Setting A Solid Foundation For Growth From Now Till 2028
SCI had a busy two months following its Investor Day on 6 Nov 23, announcing over 1GW in renewables deals. These were well spread out across Singapore, China, India and Vietnam with most of the new projects focused on wind. As at end-23, the company had 13GW of gross installed and under-development capacity, which places SCI in a good position to attain its target of 25GW by 2028. Maintain BUY. Target price: S$7.20.
WHAT’S NEW
• Quickly out of the starting blocks. Since its Investor Day on 6 Nov 23, Sembcorp Industries (SCI) has announced 753MW of acquisitions and/or tender wins in the renewables space (see table below). Thus, as at end-23, the company had 13GW of gross renewables capacity which we believe places it in a strong position to attain its target of 25GW by 2028. With the completion of its three acquisitions in China, India and Vietnam expected to happen by end-1H24, we expect positive EPS revision momentum for SCI over the next 3-6 months.
• We expect more solar exposure in the next 12-24 months. As can be seen in the table above, wind constitutes approximately 54% of its newly-announced capacity additions. However, given SCI’s previously stated desire to balance out its portfolio to add more solar relative to wind, we should expect more solar acquisitions over the next 12-24 months. As at end-1H23, SCI’s wind:solar ratio within its renewables portfolio was 53:39 (the remaining 8% being energy storage).
