When global energy prices began on a broad-based surge early this year, Sembcorp found itself in a favourable spot, capturing the upside from its mainly traditional conventional energy portfolio and to a smaller extent, its relatively new renewable energy assets.
Sembcorp Industries, the best performer of the Straits Times Index (STI) so far this year, has reported earnings for 1HFY2022 ended June that blew past expectations. Going by analysts’ revised target prices of their already bullish calls, there is further upside for the stock.
For years after the oil market slumped, Sembcorp’s earnings were weighed down by the losses incurred by Sembcorp Marine, its then 61%-held subsidiary. The “demerger”, which was completed in September 2020, in a way removed the millstone so that Sembcorp could focus on growing its utilities business and increase investments in its renewable energy portfolio. Sembcorp Marine, on the other hand, has moved on to join forces with the offshore and marine unit of Keppel Corp in a deal that is pending.
