Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Completed the acquisition of Alinta Energy, which on a pro forma basis would have lifted first-half underlying net profit to $558 million and annualized ROE to 19.1%, significantly broadening the earnings base.
- Increased interim dividend to $0.11 per share, up from $0.09 a year ago, reflecting confidence in full-year outlook and commitment to raising payout ratios toward peer levels.
- Secured a 2.6 GW Tawila Sea IPP in Abu Dhabi with a 21-year PPA, providing long-term earnings visibility and stable cash flows.
- Expanded data center and AI-driven power demand opportunities, including a 150 MW PPA with Micron (total 600 MW), a direct connection infrastructure agreement with Micron, and Wilton site positioned to deliver 280 MW of powered land by 2028.
- Alinta delivered a strong first-half performance with underlying net profit of $231 million, supported by high thermal fleet availability, low-cost generation, and new long-term gas supply contracts with Chevron and LNG Japan.
- Renewables pipeline in India remains a bright spot with 3.6 GW of high-tariff projects secured, and the group has 6.6 GW of renewable capacity under construction, positioning for future earnings growth.
- July 2026 showed strong momentum with Singapore USEP prices averaging $240/MWh and Alinta performing well across both East and West Coast markets, supporting a stronger second-half outlook.
- Tightened capital expenditure and investment spending (excluding Alinta) to $257 million in H1 2026 from $567 million a year earlier, demonstrating disciplined capital management.
- Achieved competitive financing for Alinta acquisition with a weighted average cost of debt of 3.4% and tenor of 6.6 years, lowering group weighted average cost of debt to 4.3%.
- Expanded Integrated Urban Solutions footprint in Vietnam with six new projects, growing gross development land area to over 18,000 hectares and ready-built facilities to over 1.1 million square meters, enhancing recurring income potential.
Negative Points
- Underlying net profit declined 25% year-on-year to $369 million in H1 2026, impacted by lower spark spreads, weaker renewables performance, and absence of SAM Enviro contribution.
- Renewables segment faced a challenging first half with underlying net profit down 48% to $69 million, due to weak wind and solar resources, curtailment, lower tariffs, and removal of VAT refund on onshore wind in China.
- Gas and related services saw a 14% decline in net profit, with Singapore down $33 million due to lower recontracted spreads and one-off gains not repeated, and UK down $22 million following closure of an industrial customer.
- Net debt increased by approximately $6 billion to $13.9 billion, largely due to the Alinta acquisition, resulting in a pro forma net debt to adjusted EBITDA of 5.3 times, which is elevated.
- Alinta's first-half performance included $100 million from optimizing green certificates that will not repeat in H2, and the company guided to only $100 million contribution in the second half, indicating a seasonal slowdown.
- China renewables portfolio is increasingly exposed to spot market, with around 50% of capacity now on spot, leading to higher volatility and lower tariffs.
- Battery storage prices in the UK declined by about $5 million in H1 due to supply-demand dynamics, impacting renewables earnings.
- Integrated Urban Solutions net profit declined by $16 million, partly due to the divestment of SAM Enviro and a delay in recognizing 40 hectares of land sales at Kendal Industrial Park, though the latter was booked in August.
- The group incurred $155 million in transaction costs related to the Alinta acquisition, which weighed on reported net profit.
- Geopolitical tensions and potential supply disruptions in the Middle East could impact gas prices and market stability, posing risks to future earnings.
Q & A Highlights
Q: What is the outlook for the second half of 2026, and what gives management confidence in a stronger performance?
A: Group CEO Kim Yin Wong and Group CFO Eugene Cheng stated that the second half is expected to be "meaningfully higher" than the first half. This is driven by three key factors in the Gas & Related Services segment: higher levels of retail and vesting contracts with better spreads, portfolio optimization opportunities from excess gas and the new CCP4 plant, and the significantly more efficient CCP4 plant improving spark spreads. July has already shown strong green shoots, with USEP prices in Singapore averaging $240 per megawatt hour and strong performance from Alinta across both East and West Coast markets in Australia.
Q: Can you provide more details on the interim dividend increase and the company's dividend policy going forward?
A: The Group CEO confirmed the interim dividend was increased to $0.11 per share, up from $0.09 a year ago, despite a weaker first-half performance. He emphasized that the company recognizes its dividend payout is lagging its peer group and is committed to "steadily increasing" it. He stated that the $0.11 is only a half-year payout and that investors should extrapolate a full-year payout with an increase in the second half. The CFO added that on a non-pro forma basis, a 53% payout ratio for the first half is "not unreasonable" for the year, and the company has the cash flow capacity to sustain and increase dividends while deleveraging.
Q: How is Sembcorp positioned to capitalize on the growing AI and data center demand, and what is the monetization opportunity for the Wilton site in the UK?
A: The company highlighted its strong position across multiple markets. In Singapore, it has secured over 1 GW of PPAs with data center customers, including a new direct connection infrastructure arrangement with Micron. In the UK, the Wilton site is a "precious commodity" as it is one of the few platforms able to deliver 280 MW of powered land by 2028. Vipul Tuli, President & CEO of Renewables, West, explained that monetization opportunities include selling "powered land" with grid connection and backup power, supplying power through its network, and building behind-the-meter generation. In Australia, Alinta's integrated platform is well-positioned to serve AI-driven power demand.
Q: What is the current status of the spot spread, and how much more downside is there given the recontracting of the Senoko portfolio?
A: CFO Eugene Cheng noted that the average portfolio spread declined by about $8 per megawatt hour to the low $50s. For Senoko, about 20% of the portfolio is left for recontracting, but the spreads being landed are "better than at the start of the year." The Group CEO added that with spot spreads now between $60 to $90, there is an opportunity to lock in better-quality, higher-margin contracts. The firmness in the JKM market is driving the current high USEP prices, and forward curves suggest normalization is post-2026 into 2027.
Q: How is Sembcorp thinking about capital allocation, particularly for the renewables segment, given its recent struggles?
A: Group CEO Kim Yin Wong stated that capital allocation is a reflection of strategy and is constantly adjusting. While renewables remain a key part of the energy transition, the company will be "selective" and chase higher-margin projects, particularly in India where it has a strong pipeline of hybrid projects with secured high tariffs. He also highlighted Australia as a key geography for renewable investment to complement Alinta's existing fleet. The company will continue to allocate capital to gas and related services, which is seeing high demand from digital infrastructure, and to IUS for building recurring cash flows.
Q: What is the expected contribution from Alinta in the second half of 2026, and how does its performance compare to peers like AGL and Origin?
A: The Group CEO reiterated guidance for a $100 million net profit contribution from Alinta to the Sembcorp group in the second half of 2026. Alinta's CEO, Jeff Dimery, explained that its superior performance versus peers is due to its significant exposure to the West Coast of Australia, where prices are at record levels, unlike the East Coast. He also noted that Alinta has been well-hedged, insulating it from declining forward curves, and that its low-cost generation base provides a competitive advantage. The full first-half run rate for Alinta was $231 million, which included a $100 million one-off gain from optimizing green certificates.
Q: What is the impact of renewable energy imports from Malaysia on Sembcorp's Singapore business, and will it cannibalize existing demand?
A: Group CEO Kim Yin Wong stated that imported renewables are currently not competitive with domestic generation when factoring in generation, transmission, and government tolls. He estimated that imported power would land in the $270-$300 per megawatt hour range, which is not attractive to most customers. He does not see this as a material disruption in the 2028-2030 planning horizon. Sembcorp is positioning itself to be a "full court press" intermediary, signing contracts with upstream generators and serving its existing customer base, ensuring it is not left out when imports become viable.
Q: Can you provide an update on the India renewables business, particularly regarding grid bottlenecks and the potential for a capital recycling exercise (IPO)?
A: Vipul Tuli, President & CEO of Renewables, West, stated that while grid infrastructure has not kept pace at a national level, Sembcorp's operational portfolio has curtailment levels of less than 1%. The company's strategy is to time project commissioning to align with permanent grid access (GNA) to avoid curtailment issues. Regarding capital recycling, CFO Eugene Cheng confirmed the company is "gearing up" for an exercise, noting the strong recent performance of listed India renewables companies like CleanMax and Juniper, which indicates a favorable market window. He did not provide a specific timeline but said the company is positioning itself to take advantage of market momentum.
Q: What is the company's strategy for the China renewables portfolio, and are there plans to divest underperforming assets?
A: Group CEO Kim Yin Wong stated that selling China assets now, when things are not going well, would mean selling at a discount, and the company does not need the cash. He indicated that divesting China assets is not a top priority. However, CFO Eugene Cheng noted that China remains a
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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