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Sembcorp Industries Limited Outlines Its Game Plan for ASEAN And Bangladesh

Sembcorp Industries Limited (SGX: U96) held its 2016 fourth quarter earnings briefing in February. Among the key topics covered was the company’s game plan for ASEAN and Bangladesh.

As a brief background, Sembcorp Industries has three business segments, namely Utilities, Marine, and Urban Development & Others. The former two are by far the most important segments for the company. (It’s worth noting that the conglomerate’s Marine business stems from its majority ownership of Sembcorp Marine Ltd  (SGX: S51).)

Home ground

Singapore remains an important cog in the net profit for Sembcorp Industries’ Utilities segment. In 2016, the Lion City accounted for $132.1 million in net profit, which represents over 38% of the segment’s total net profit. The Singapore operations of Sembcorp Industries’ Utilities segment has a 1,225 mega-watt (MW) gas fired plant located in Jurong Island.

2017-04-06 SembCorp Industries ASEAN
Source: Sembcorp Industries earnings presentation

Sembcorp Industries is also making forays into Myanmar and Bangladesh. Tang Kin Fei, the company’s chief executive officer, commented:

“Well, for ASEAN and Bangladesh, you can see that our Myanmar and Bangladesh projects are progressing well. The planned construction is progressing well, and we should expect — we expect the completion of these two plants in 2018.”

Myanmar’s gas-fired independent power plant (IPP) in Myingyan is expected to bring a capacity of 230 MW. Meanwhile, Bangladesh’s Sirajganj IPP will have a power capacity of 427 MW. Both capacities are covered with long term power purchase agreements.

Elsewhere, Tang also made a quick comment on the Utilities segment’s Vietnam operations:

“Our plant in Vietnam has continued to perform well. So we want — our focus is to deepen our presence in ASEAN and also in Bangladesh in the coming years.”

Sembcorp Industries has a 746 MW gas-fired plant in Vietnam. If we stack up the power capacity of its Vietnam, Myanmar, Singapore and Bangladesh operations, it would add up to 2,628 MW. This would represent around 24% of Sembcorp Industries’ total power capacity.

Moving forward, the Utilities segment’s Singapore operations is expected to remain under pressure from intense competition. Koh Chiap Khiong, Sembcorp Industries’ chief financial officer, said:

“In Singapore, the centralized utilities, gas and solid waste management businesses are expected to remain steady. However, the power business continues to face intense competition”

For 2017, Sembcorp Industries has two renewable energy projects slated for completion in Singapore – a 6 MW solar power project and a 140 tonnes per hour (tph) rated energy-from-waste (EfW) facility.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.