However, on the back of slower earnings trajectory and the company’s high leverage upon completion of the Alinta deal, Samant expects any gains in Sembcorp’s share price to be constrained.
Sembcorp Industries’ FY2025 results did not inspire, as several analysts either downgraded their calls or lowered their respective target prices. JP Morgan remains “neutral” but with a reduced target price of $5.80; Macquarie Equity Research initially maintained the counter as “outperform” with TP of $6.59 (down from $7.04) on the morning of Feb 25 in a flash note before Sembcorp’s results briefing. However, Macquarie later downgraded the counter to “neutral” in a report issued on Feb 26, reducing TP further from $6.59 to $6.43.
JP Morgan analyst Sumedh Samant describes Sembcorp’s discussion on dividend outlook as “constructive”, noting that management is keen to close the dividend payout ratio and yield gap with respect to local and regional peers, while maintaining a sustainable absolute dividend per share level. With a payout of 25 cents per share, up from 23 cents in FY2024, the company’s payout ratio and yield is respectively around 40% and 4% currently while its peers are around 60-70% and 5% respectively.
