Sembcorp Industries announced plans to invest S$700 million ($528.5 million) in its green energy initiatives. The move aligns with the Temasek-backed company's strategy to transition to low-carbon energy and expand its renewables portfolio.
The Singapore-based energy producer aims to meet the rising demand for sustainable facilities and establish itself as a major low-carbon firm. The investment will be funded through a combination of operating cash flow, project financing, internal funding, and capital recycling. Sembcorp intends to develop its integrated urban solutions segment into a key developer of low-carbon industrial parks in Asia.
The company is also exploring partnerships to create an asset management platform, which will help diversify and expand its operations. Sembcorp highlighted its commitment to growing its urban business presence in Vietnam and Indonesia, exploring new markets, and optimizing operations in China to improve returns.
“Urban business will continue to grow its presence in Vietnam and Indonesia, explore new markets and optimize its operations in China to improve returns,” the company stated.
Analysts have previously supported Sembcorp's energy transition strategy. Maybank analysts noted that while near-term earnings might have peaked, the “green transition” theme remains intact, reducing revenue risks.
Sembcorp forecasts annual net profit to remain “fairly stable,” with higher earnings from its gas and related services segment expected to offset lower contributions from the renewables division. The company anticipates a decline in renewables business earnings in the second half, citing China's weak macro-economic situation and financial downturn as potential negative factors for renewable energy demand.
Despite these challenges, the completion of planned maintenance for the co-generation plant in Singapore is expected to support earnings growth. For the first half of the year, Sembcorp reported an attributable profit from continuing operations of S$540 million, compared to S$608 million in the same period last year.
