Sembcorp Industries is focusing on mergers and acquisitions (M&A) and capital recycling to drive future growth, according to a recent report by CGS International. The company, which faced a dip in profits from its gas and related services in the first half of 2025, is looking to offset these challenges by leveraging synergies from Senoko Energy and exploring new opportunities in the Middle East.
In the first half of 2025, Sembcorp reported a net profit of $392 million (S$536 million), a 1% year-on-year decrease, largely due to a weaker performance in its gas and related services segment. This was attributed to the absence of one-off gas-related gains and high-priced renewable energy imports from Malaysia. However, the company expects an improved performance in the second half of the year, with Senoko Energy projected to contribute significantly to profits.
Sembcorp is also exploring capital recycling of mature renewable energy assets in India, where it currently has an installed capacity of 3.3 gigawatts. The company anticipates that this strategy could be realised by the end of 2025 or early 2026. Additionally, Sembcorp is pursuing M&A opportunities in the Middle East, aiming for deals that could yield earnings accretion of around $73 million (S$100 million).
Despite the challenges, Sembcorp maintains a positive outlook, with a target price of $5.88 (S$8.02) based on a 13x price-to-earnings ratio for 2026. The company remains committed to enhancing shareholder value through strategic initiatives and operational improvements.
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