Analyst Paul Chew of Phillip Securities maintained a Buy rating on Sembcorp Industries, with a price target of S$7.90.
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Paul Chew has given his Buy rating due to a combination of factors influencing Sembcorp Industries’ performance. Despite the underwhelming gas earnings, which were affected by one-off events and contract renewals at lower spreads, the company has shown significant growth in its renewables sector. In particular, the Indian renewables market has been a strong performer, with a 22% increase in earnings driven by a substantial rise in attributable capacity and favorable wind conditions.
Furthermore, Sembcorp Industries has demonstrated confidence in its financial health by significantly increasing its interim dividend by 50% year-over-year. The company is expected to continue enhancing shareholder value through higher dividends and potential monetization of its Indian renewable assets. Although the target price has been slightly lowered, the company’s valuation remains attractive, supported by a robust expected yield and return on equity. The anticipated growth in renewable capacity and strategic acquisitions are expected to drive earnings in the latter half of the year.
In another report released yesterday, Citi also maintained a Buy rating on the stock with a S$7.84 price target.
SCRPF’s price has also changed dramatically for the past six months – from $3.850 to $6.100, which is a 58.44% increase.