<Results Analysis> FY23 results first take
• FY23 core profit slightly above, thanks to stellar Singapore power earnings and renewable growth
• Renewable segment saw 42% jump in net profit; sustainable solutions contributed to c.30% of group profit
• Declared 8 Sct final dividend, translating to dividend yield of over 2%; Reiterate BUY and TP S$7.15
What’s new
Sembcorp Industries (SCI)’s FY23 core profit (excl. SEIL divestment loss of S$78m) of S$1bn is 5% above our estimate. The outperformance was attributable to stronger-than-expected Gas & Related services, especially Singapore power. Net profit for Gas segment was down a slight S$60m hoh to S$374m in 2H23, despite sharp Uniform Singapore Energy Price (USEP) decline, bringing full year profit to S$809m, accounting for over 70% of group profit. Renewable segment performed well, up c.42% yoy to S$200m while Integrated urban solutions also saw sequential improvement in 2H23 (+45% hoh from low base), with full year profit contributions of S$121m (-19% yoy). Group declared 8 scts final DPS, bringing full year DPS to 13 Scts, in line with expectations. This translates to c.2% yield.
Our View:
Singapore power core earnings looks sustainable at elevated levels as c.95% of capacity are contracted and measures in place to manage/hedge gas cost. Though Gas segment earnings likely to be a tad lower than 2H23 with major maintenance for Singapore power plants scheduled in 1H23 and retirement of Phu My3 power plant from Feb-2024. Renewable will be the key growth driver. Installed capacity totaled 9.8GW as of Feb-2024, with c.4GW under construction, which will come online the next 2-3 years and drive double digit earnings growth. We will fine tune our numbers and provide more update after results briefing. Maintain BUY, current TP S$7.15
Segmental Breakdown
| Interim | Annual | ||||||
| Core Profit | 1H22 | 2H22 | 1H23 | 2H23 | 2022 | 2023 | |
| Gas and Related Services | 296 | 307 | 435 | 374 | 603 | 809 | |
| Renewables | 76 | 57 | 120 | 78 | 133 | 198 | |
| Integrated Urban Solutions | 63 | 80 | 54 | 72 | 143 | 126 | |
| Decarbonisation Solutions | (1) | (3) | (3) | (7) | (4) | (10) | |
| Others / Corporate | (0) | (27) | 2 | (101) | (27) | (99) | |
| Total Net Profit | 434 | 414 | 608 | 412 | 848 | 1,020 |