04/02/2022, 15:42 Brokers' take: CGS-CIMB raises Sembcorp target price to S$2.

e to S$2.96 after adjusting valuation methodology, Companies & Markets - THE B…

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Brokers' take: CGS-CIMB raises Sembcorp

target price to S$2.96 after adjusting valuation
methodology
 FRI, FEB 04, 2022 - 3:06 PM

VIVIENNE TAY  vtay@sph.com.sg  @VivienneTayBT

Sembcorp’s operating wind power asset in Huanghua, Hebei, China. PHOTO: SEMBCORP

CGS-CIMB on Friday (Feb 4) raised its target price (TP) on Sembcorp Industries (SCI) to
S$2.96 from S$2.51 after adjusting its valuation methodology to the sum of parts from
price to earnings, based on the group's new segment reporting.

The research team reiterates its "add" call on the counter, according to a report dated
Feb 3.
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04/02/2022, 15:42 Brokers' take: CGS-CIMB raises Sembcorp target price to S$2.96 after adjusting valuation methodology, Companies & Markets - THE B…

The new TP represents a potential upside of 23.3 per cent from SCI's trading price of
S$2.40 as at 2.37 pm on Friday. Shares of the company were up 2.6 per cent or S$0.06 at
the time.

The S$2.96 TP also implies a price-to-earnings ratio of 11 times for FY2023, which is
below the blended trading band of Asian renewable and conventional energy peers -
which are trading at 14 times.

"Our competitive analysis of SCI's gearing shows that its balance sheet position is in line
with peers with similar renewable portfolio and aspirations," said CGS-CIMB analysts
Lim Siew Khee and Izabella Tan.

Moreover, consistent delivery of earnings with no significant impairments could put

SCI's earnings profile ahead of its peers, said Lim and Tan.

SEE ALSO
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They are projecting 3-year earnings per share (EPS) compound annual growth rate of 47
per cent, versus 17 per cent for regional peers. The renewables segment is expected to
achieve a year-on-year net profit growth of 26 per cent - mainly from the full-year
contributions from recent renewable acquisitions - CGN Capital Partners and SDIC New
Energy.

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04/02/2022, 15:42 Brokers' take: CGS-CIMB raises Sembcorp target price to S$2.96 after adjusting valuation methodology, Companies & Markets - THE B…

CGS-CIMB also raised its FY2022-23 EPS forecasts by 36-54 per cent to account for SCI's
renewable energy acquisitions in China, as well as the group's long-term power contract
and coal contract in India.

The research team has shaved its FY2021 EPS projections by around 23 per cent on
higher corporate costs and lower urban development profits in H2 2021.

SEMBCORP INDUSTRIES BROKER'S TAKE RENEWABLE ENERGY

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