- Earnings growth supported by the increase in Seonoko Energy stake by 20% to 50% for S$69mn. There is room to improve earnings from lower cost of debt, a higher proportion of long-term contracts, and new capacity.
- Renewables growth to be supported by the 36% jump in installed capacity in 2H24. The complex hybrid projects in India will also drive margins from the higher electricity price. Curtailment in China is expected to remain elevated due to the surge in renewable capacity outpacing demand.
- We increased our earnings by 5% to S$1,131mn due to the Senoko acquisition. Our target price is raised from S$7.10 to S$8.10. We increased the EV/EBITDA from 8x to 9x in line with peer valuations. The associate and DPN are valued at book value. Our ACCUMULATE recommendation is raised to BUY. Demand for power in Singapore will be driven by new electric vehicles, data centres, and semiconductor electricity. With more stable earnings and operating cash flow, we expect the dividend payout ratio to increase from 40% to 50% in FY25e. Earnings contribution from integrated urban areas will be less certain due to Trump's reciprocal tariffs, especially on Vietnam.
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