# Sembcorp Industries — FY 2023 Full-Year Financial Results Webcast Briefing

Event: FY 2023 Full-Year Financial Results Webcast Presentation & Analyst Q&A
Date: 20 February 2024
Issuer: Sembcorp Industries (SGX:U96)
Provenance: automated speech recognition (asr) of the issuer's public webcast recording
Source recording: https://webcast.openbriefing.com/sembcorp_fy2023/
Official record: https://www.sembcorp.com/en/investor-relations/
Presenters: Wong Kim Yin (Group President & Chief Executive Officer), Eugene Cheng (Group Chief Financial Officer)
Words: ~1,810

Unofficial machine transcript. Prepared by SMID Research from the issuer's public webcast recording by automated speech recognition, without a full manual check: expect mis-heard names and figures. There is no speaker attribution: the source recording carries no diarisation, so cues are shown as timestamp and text only; timestamps refer to the recording. Not a company publication. Sembcorp Industries' own investor relations page (https://www.sembcorp.com/en/investor-relations/) is the authoritative record. Copyright in the briefing rests with Sembcorp Industries; contact contact@smidresearch.com for corrections or removal.

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[00:18:13] Test one two three four five six seven eight nine ten. So audio check for primary and backup streaming. Test one two three four five six seven eight nine ten. Test one two three four five six seven eight nine ten. Ladies and gentlemen good morning and welcome to SAMCUP Industries full year 2023 results

[00:30:29] presentation. A warm welcome to to viewers tuning in via the webcast. I'm Xin Jin from Group Corporate Communications and Investor Relations. Before we begin we would like to request for all mobile phones to be turned off or switch to the silent mode please. If you feel unwell do approach our staff for assistance. The members of the panel for today's presentation are Group President and CEO Mr. Wong Kim in and Group CFO Mr. Eugene Cheng. There will be a question and answer session after the presentation. For viewers of the webcast please key in your questions in the Q&A box by clicking on the raise hand icon on the webcast page. Without further delay I will now hand over the time to Kim in to begin the presentation. Kim in please. Thanks Jin. Good morning and wishing all of you happy and prosperous lunar new year. Welcome to SAMCUP Industries full year 2023 results briefing. For 2023 the

[00:31:32] group delivered a strong performance. Turnover was seven billion dollars. This is ten percent lower year on year while the EBITDA was one point eight billion dollars thirty seven percent higher than 2022. Adjusted EBITDA was two point one billion dollars an increase of 32 percent. Net profit before exceptional items was one billion representing a year on year increase of 38 percent. Exceptional items EI for short was two million dollars for 2023. Earnings per share before EI was 57.1 cents and EPS itself was 57.2 cents. Group ROE before EI and Group ROE were both 23.8 percent. So in light of the group's strong results the board is proposing a final dividend of eight cents per ordinary share for 2023. So together with the interim

[00:32:39] dividend of five cents paid in August total dividend for the year will be 13 cents per ordinary share an increase from the 12 cents of last year. Let me go through the key business updates. In 2023 we achieved cash flow certainty for the gas and related services segment. We the first in the market to secure multiple long term PPAs with our customers in Singapore. These power purchase agreements contracted with quality customers represent contracted capacity of up to 668 megawatts. With this long term PPAs 74 percent of our generation capacity is contracted for a period of between 8 to 18 years and this enhances earnings predictability. So in total these contracts have an

[00:33:40] average tenure of 12 years that transforms our merchant centric portfolio into one that use a stable recurring income. As a group contracted capacity accounted for 97 percent of the group's gas fired power portfolio as at the end of 2023. For Singapore our gas fired portfolio was 99 percent contracted as at the end of 2023 and during the year we continued to diversify our gas sources to support the energy needs of Singapore. We signed a gas sales agreement with Medco, EMP, Netuna to import pipe natural gas from West Netuna gas fields in Indonesia. The agreement is valued at approximately 1.9 billion dollars and gas deliveries are expected to commence in the later part of 2024 with a tenure of four years. We have also started the construction of

[00:34:44] our new multi-utility centre at Jirong Island. This facility will include a new 600 megawatts hydrogen ready combined cycle power plant and it is expected to be fully operational by 2026. Now to renewables. We achieved significant progress and very strong momentum in renewables growth. Since the end of 2022 we have added a total of 4,000 megawatts of capacity through acquisitions and organic growth across our key markets of China, India and South East Asia. This brings the group's total gross renewables capacity to 13.8 gigawatts. In China we grew organically by leveraging our partnership platforms. We also acquired brownfield projects to deepen our presence in the market. Year-on-year capacity increased 3,000 megawatts in 2023. In India

[00:35:51] portfolio expansion was driven by both greenfield and brownfield project additions. The acquisition of lip green energy, 228 megawatts operational wind assets portfolio was completed earlier this month. We also secured 750 megawatts of greenfield projects from competitive bidding in December and January. Our South East Asia renewables portfolio has surpassed the 1,000 megawatts capacity mark. Notably we were awarded Singapore's largest solar project of 117 megawatt peak by JTC. We also signed an agreement to acquire a 245 megawatt portfolio of operational wind, solar and hydro assets from JLAC group in Vietnam. The transaction is expected to close within the first half of this year. In 2023 the urban business registered higher land sales at 248 hectares compared to 172

[00:36:59] hectares in 2022. The increase mainly came from industrial land sales in Indonesia and Vietnam. However earnings declined year-on-year as commercial and residential land sales and hand over residential units in Vietnam were lower. Commercial and residential sales typically command higher margins compared to industrial land sales. During the year we continued to build out our land bank with the award of three new investment licenses in Vietnam, adding a total of 1,290 hectares to our land bank. We believe strong market potential remains in Vietnam and Indonesia from the expansion of regional supply chains. The volume of water treated in our water business remains stable. Excluding the one-off termination fee received from a customer of the water business in China in 2022, 2023 earnings of our water business improved on cost savings.

[00:38:05] The waste management business in Singapore saw a 25% increase in its collection of recyclables in 2023. This is a result of our strategic partnerships and initiatives which are aimed at promoting more recycling. During our investor day 2023 in November we shared our refreshed strategy and targets. So this is a snapshot of our progress against those targets. With multiple long-term power purchase agreements secured our guest portfolio is now significantly contracted. This deliberate strategy on our part is aimed at ensuring a robust earnings and cash flow to support our renewables growth moving forward. In May 2021 we set a target to achieve 10 gigawatts

[00:39:05] of gross installed renewables capacity by 2025. So gross installed renewables. And we are very close to this target with 9.8 gigawatts of gross installed renewables capacity at this point in time. We currently see strong momentum in our renewables growth as mentioned just now. And we'll focus our effort on achieving our refreshed target of 25 gigawatts by 2028. We have achieved also our 2025 emissions intensity target of 0.4 tonnes of CO2 equivalent per megawatt hours. And we are working towards our new target of 0.15 tonnes of CO2 equivalent per megawatt hours to be achieved by 2028. To drive growth beyond 2028 we must continue to advance our decarbonisation pathways. And these are some of the new initiatives that has a longer term horizon.

[00:40:08] This includes the origination of low carbon electricity through regional power imports, low carbon feedstock and low carbon technologies. During the year we received conditional approval to import 1.2 gigawatts of low carbon electricity from Vietnam to Singapore. This is largest import licence issued by the Energy Market Authority. We are also in exclusive discussions to import 1,000 megawatts of low carbon electricity from Sarawak. This imports will enable our customers to have greater access to green energy in the long run. We have also signed agreements with strategic partners to pursue opportunities in the production of low carbon feedstock. We are collaborating with Sojits Corporation and Kyushu Electric Power both from Japan to pursue potential opportunities for the production of green ammonia in India for export into Japan. In

[00:41:15] Singapore we have been shortlisted as one of six candidates by the Energy Market Authority to submit proposals for low or zero carbon ammonia solution for power generation and bunkering on Jirong Island.

[00:41:29] In addition, we have signed a joint development study agreement with PTPLN, to assess the feasibility of green hydrogen production in Indonesia for export to Singapore as well as an MOU with Gentari of Malaysia to export the development of hydrogen production facilities and transportation of hydrogen from Malaysia to Singapore. As we continue to operate our gas-fired plants efficiently to support the energy transition, we are also exploring low carbon technologies to decarbonize our assets. In October 2023, we signed an MOU with IHI Corporation and GE Vanova's gas power business to jointly explore the retrofitting of our existing SACRA power plant in Singapore with ammonia firing capabilities. And finally, GoNet Zero, our carbon management

[00:42:31] business, has secured over 40 multinational clients across various industries and this includes OCBC, RAZR and UPS. During the year, it sold more than 2 million tons of carbon credits and registered a 9-fold increase in renewable energy certificate sales to 1.8 million units.

[00:42:58] So overall, 2023 was marked by continued strong momentum in the renewables business and good progress against targets that we have set out. We are encouraged by the strong performance in 2023 and we believe SAMCOP is well positioned to navigate the energy transition and sustainable development. Eugene will now take us through the details of our financial review. Thank you. Thank you, Kibbin. And I just want to wish everyone indeed a very happy new year and it's my privilege to be sharing more details in relation to our financial performance for the financial year ended 2023. From a performance standpoint, this is a little bit of a watershed for SAMCOP industries. Indeed, we have achieved a net profit before exceptional items that could be seen as the highest that we have ever achieved in the operating history of SAMCOP industries. So when we go into a little more details in relation to the numbers,

[00:44:00] as Kibbin has mentioned earlier on, our turnover declined approximately 10%, largely as a result of a lower gas as well as power prices in a gas and related services segment. Now, I think one of