Half Year 2026 Sembcorp Industries Ltd Earnings Call

August 13, 2026

Speaker #1: Ladies and gentlemen, a very good morning to everyone joining us both in person and online. Welcome to Sembcorp Industries' first-half 2026 results presentation.

Ling Xin Jin: Ladies and gentlemen, a very good morning to everyone joining us both in person and online. Welcome to Sembcorp Industries' H1 2026 results presentation. I am Xin Jin from Group Strategic Communications and Portfolio Management. Before we begin, may I kindly request that all mobile phones be switched off or set to the silent mode. Thank you. Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin, and our Group CFO, Mr. Eugene Cheng. There will be a question and answer session following the presentation. For those joining us online, please submit your questions via the Q&A box by clicking on the raise hand icon on the webcast page. Without further delay, I will now hand over to Kim Yin to begin the presentation. Kim Yin, please.

Xin Jin: Ladies and gentlemen, a very good morning to everyone joining us both in person and online. Welcome to Sembcorp Industries' H1 2026 results presentation. I am Xin Jin from Group Strategic Communications and Portfolio Management. Before we begin, may I kindly request that all mobile phones be switched off or set to the silent mode. Thank you. Joining us on the panel today are our Group CEO, Mr. Wong Kim Yin, and our Group CFO, Mr. Eugene Cheng. There will be a question and answer session following the presentation. For those joining us online, please submit your questions via the Q&A box by clicking on the raise hand icon on the webcast page. Without further delay, I will now hand over to Kim Yin to begin the presentation. Kim Yin, please.

Speaker #1: I'm Sinjin from Group Strategic Communications and Portfolio Management. Before we begin, may I kindly request that all mobile phones be switched off or set to silent mode.

Speaker #1: Thank you. Joining us on the panel today are our Group CEO, Mr. Wong Kim In, and our Group CFO, Mr. Eugene Cheng. There will be a question-and-answer session following the presentation.

Speaker #1: For those joining us online, please submit your questions via the Q&A box by clicking on the raise-hand icon on the webcast page. Without further delay, I will now hand over to Kim In to begin the presentation.

Speaker #1: Kim In, please.

Speaker #2: Yes, good morning. Welcome to SEI's first half 2026 results briefing. Let me begin with the key highlights. For the first half of 2026, turnover was $3.8 billion.

Wong Kim Yin: Good morning. Welcome to SCI H1 2026 results briefing. Let me begin with the key highlights. For H1 2026, turnover was SGD 3.8 billion, EBITDA SGD 768 million, adjusted EBITDA SGD 947 million. Underlying net profit was SGD 369 million, and this translates into earnings per share of SGD 0.207 and annualized group ROE of 13%. We completed the acquisition of Alinta in June. We are showing the pro forma financials and this illustrates the group's earnings profile with Alinta included for the full period of the H1. On a pro forma basis, turnover would have been SGD 5.6 billion, EBITDA and adjusted EBITDA would have been SGD 1.2 billion and SGD 1.4 billion respectively. Underlying net profit would have been SGD 558 million with earnings per share SGD 0.314 and annualized group ROE at 19.1%.

Speaker #2: EBITDA was $768 million, adjusted EBITDA was $947 million. Underlying net profit was $369 million, and this translates into earnings per share of 20.7 cents and an annualized group ROE of 13%.

Speaker #2: We completed the acquisition of a linter in June. We are showing the pro forma financials, and this illustrates the group's earnings profile with the linter included for the full period of the first half.

Speaker #2: On a pro forma basis, turnover would have been $5.6 billion. EBITDA and adjusted EBITDA would have been $1.2 billion and $1.4 billion, respectively. Underlying net profit would have been $558 million, with earnings per share of 31.4 cents, and annualized group ROE at 19.1%.

Speaker #2: The acquisition of a linter broadens Sembcorp's earnings base and increases the contribution from integrated platforms with recurring cash flows. So in line with our outlook for the full year, we are pleased to increase the interim dividend to $0.11 per share, up from $0.09 a year ago.

Wong Kim Yin: The acquisition of Alinta broadens Sembcorp's earnings base and increases the contribution from integrated platforms with recurring cash flows. In line with our outlook for the full year, we are pleased to increase the interim dividend to SGD 0.11 per share, up from SGD 0.09 a year ago. Allow me to take you through the performance of each of the business segments. First, under Gas and Related Services. For H1 2026, underlying net profit for the segment was SGD 285 million. Spark spreads were lower in H1. This was partially mitigated by our contracted portfolio. As of June 2026, 80% of Sembcorp's gas-fired generation portfolio, excluding Senoko's, is contracted for five years and above. Our overseas assets remain resilient. In the Middle East, our operations performed well despite ongoing geopolitical tensions.

Speaker #2: Allow me to take you through the performance of each of the business segments. First, under Gas and Related Services, for the first half of 2026, underlying net profit for the segment was $285 million.

Speaker #2: Spark spreads were lower in the first half, and this was partially mitigated by our contracted portfolio. As of June 2026, 80% of Sembcorp's gas-fired generation portfolio, excluding Sunoco's, is contracted for five years and above.

Speaker #2: Our overseas assets remain resilient. In the Middle East, our operations perform well despite ongoing geopolitical tensions. We further expanded our platform in the Middle East through the 2,600-megawatt Tawila Sea Independent Power Project in Abu Dhabi, underpinned by a 21-year PPA and a strong contractual framework.

Wong Kim Yin: We further expanded our platform in the Middle East through the 2.6 gigawatt Taweelah C independent power project in Abu Dhabi. Underpinned by a 21-year PPA and a strong contractual framework, the project will provide long-term earnings visibility and stable cash flows to our overseas portfolio. In the UK, earnings were lower following the closure of one of our industrial customers. We are actively repositioning the Wilton site to capture new demand from data centers and digital infrastructure. Looking ahead, our 600 megawatt hydrogen-ready power plant remains on track for completion in Q4 of this year. This will enhance our generation capacity and the competitiveness of our generation fleet. During the period, we also secured 150 megawatt long-term power purchase agreement with Micron, bringing our total contracted supply to the semiconductor manufacturer to 600 megawatts.

Speaker #2: The project will provide long-term earnings visibility and stable cash flows to our overseas portfolio. In the UK, earnings were lower following the closure of one of our industrial customers.

Speaker #2: We are actively repositioning the Wilton site to capture new demand from data centers and digital infrastructure. Looking ahead, our 600-megawatt, hydrogen-ready power plant remains on track for completion in the fourth quarter of this year.

Speaker #2: This will enhance our generation capacity and the competitiveness of our generation fleet. During the period, we also secured a 150-megawatt long-term power purchase agreement with Micron, bringing our total contracted supply to the semiconductor manufacturer to 600 megawatts.

Speaker #2: In addition, we announced an agreement to acquire a 20% stake in Aster Power, where Sembcorp will be the sole gas supplier to the Aster facilities.

Wong Kim Yin: In addition, we announced an agreement to acquire 20% stake in Aster Power, where Sembcorp will be the sole gas supplier to the Aster facilities. Overall, Gas and Related Services remains well-positioned, supported by our contracted base, integrated gas and power capabilities, and growing demand from AI-related industries. The Renewables segment faced a challenging H1, with underlying net profit of SGD 69 million. In China, generation hours experienced weak wind and solar resources. Curtailment, lower tariffs, and the removal of VAT refund on onshore wind projects further impacted the segment. Our focus remains on disciplined execution and value creation within the portfolio. India remains a bright spot with Renewables. We have 3.6 gigawatts of projects with high tariffs secured in the pipeline. Today, the group has a total of 6.6 gigawatts of renewable capacity under construction.

Speaker #2: And overall, gas and related services remain well-positioned, supported by our contracted base, integrated gas and power capabilities, and growing demand from AI-related industries. The renewables segment faced a challenging first half, with underlying net profit of $69 million.

Speaker #2: In China, generation hours experienced weak wind and solar resources. Curtailment lowered tariffs, and the removal of VAT refund on onshore wind projects further impacted the segment.

Speaker #2: Our focus remains on disciplined execution and value creation within the portfolio. India remains a bright spot with renewables. We have 3.6 gigawatts of projects with high tariffs secured in the pipeline.

Speaker #2: Today, the group has a total of 6.6 gigawatts of renewable capacity under construction. As this pipeline comes into operation, it will strengthen the portfolio's earning potential and long-term value.

Wong Kim Yin: As this pipeline comes into operation, it will strengthen the portfolio's earning potential and long-term value. With a sizable operating base and a strong pipeline under construction, we are now well-positioned to unlock greater value from our investments in the Renewables segment. Move on to Integrated Urban Solutions. The IUS segment delivered underlying net profit of SGD 62 million in H1 2026. This mainly reflects the absence of contribution from Sembcorp Environment following its divestment in March 2025, partially offset by improved performance from the water business on stronger contribution from industrial water. Our urban business continued to expand its footprint and build recurring income. In Vietnam, we secured six new projects, including the group's gross development land area to over 18,000 hectares across 31 projects, achieving our 2028 target well ahead of schedule. We are also growing our ready-built facilities portfolio.

Speaker #2: With a sizable operating base and a strong pipeline under construction, we are now well-positioned to unlock greater value from our investments in the renewable segment.

Speaker #2: Moving on to Integrated Urban Solutions. The IUS segment delivered underlying net profit of $62 million in the first half of 2026. This mainly reflects the absence of contribution from SEM Enviro following its divestment in March 2025, partially offset by improved performance from the water business on stronger contribution from industrial water.

Speaker #2: Our urban business continued to expand its footprint and build recurring income. In Vietnam, we secured six new projects, increasing the group's gross development land area to over 18,000 hectares across 31 projects.

Speaker #2: We are achieving our 2028 target well ahead of schedule. We are also growing our ready-built facilities portfolio. Gross floor area has grown from 134,000 square meters in 2023 to over 1.1 million square meters as of June 2026.

Wong Kim Yin: Gross floor area has grown from 134,000 square meters in 2023 to over 1.1 million square meters as of June 2026. This will strengthen the base for recurring income moving forward. Looking ahead, we expect a strong H2 from higher land sales. In Kendal Industrial Park, Indonesia, 40 hectares of land sales have already been secured and are expected to be recognized upon handover in the later part of the year. Within the water business, we continue to sharpen our portfolio and focus on areas where we see stronger returns. During the period, we completed the divestment of a municipal water in Qinzhou. This is our second municipal water exit in China since December 2025. As you can see, we remain focused on growing the urban portfolio and its recurring income while optimizing our water portfolio to build stronger earning base for the segment.

Speaker #2: This will strengthen the base for recurring income moving forward. Looking ahead, we expect a strong second half from higher land sales. In Kendall Industrial Park, Indonesia, 40 hectares of land sales have already been secured, and are expected to be recognized upon handover in the later part of the year.

Speaker #2: Within the water business, we continue to sharpen our portfolio and focus on areas where we see stronger returns. During the period, we completed the divestment of a municipal water asset in Qingzhou.

Speaker #2: This is our second municipal water exit in China since December 25. So, as you can see, we remain focused on growing the urban portfolio and its recurring income.

Speaker #2: While optimizing our water portfolio to build a stronger earnings base for the segment. For Alinta, the acquisition of Alinta Energy was completed in June 2026, adding a high-quality integrated energy platform in Australia to the group.

Wong Kim Yin: For Alinta, the acquisition of Alinta Energy was completed in June 2026, adding a high-quality integrated energy platform in Australia to the group. On this slide, we are showing Alinta's H1 performance to provide a clearer view of the strength and earnings capacity of the business. Alinta delivered a strong H1 with underlying net profit increasing to AUD 231 million from AUD 101 million a year ago. This was supported by a high thermal fleet availability, and Alinta has the lowest cost generation base in all of Australia through its fleet of generation plants, particularly Loy Yang B coal facility in Victoria. During H1 2026, Alinta also strengthened its long-term gas position. It secured two new long-term gas supply contracts with Chevron and LNG Japan in Western Australia. The business also benefited from strong portfolio management, capturing value through portfolio flexibility across generation and retail markets.

Speaker #2: On this slide, we are showing Alinta's first-half performance to provide a clearer view of the strength and earnings capacity of the business. Alinta delivered a strong first half, with underlying net profit increasing to $231 million from $101 million a year ago.

Speaker #2: This was supported by a high thermal fleet availability, and Alinta has the lowest-cost generation base in all of Australia through its fleet of generation plants, particularly the Loy Yang B coal facility in Victoria.

Speaker #2: During the first half of '26, Alinta also strengthened its long-term gas position. It secured two new long-term gas supply contracts with Chevron and LNG Japan.

Speaker #2: In Western Australia, the business also benefited from strong portfolio management, capturing value through portfolio flexibility across generation and retail markets. Alinta's first half performance reflects the strength of its integrated platform.

Wong Kim Yin: Alinta's H1 performance reflects the strength of its integrated platform. Looking ahead, its strong generation, retail, and development capabilities are expected to strengthen Sembcorp's earnings base, enhance recurring cash flows, and add further resilience to Sembcorp's diversified portfolio. I would like to touch on this growing wave, and some people call tsunami of AI and data center demand. As you all know, AI and data center growth is increasingly becoming relevant to our portfolio. New data center bids require both power supply reliability and a credible pathway to low carbon energy. This plays to Sembcorp's strength given our integrated energy portfolio and the suite of lower carbon solutions. In Singapore, we are trusted partner to data center and digital infrastructure customers with over 1 GW of power purchase agreement secured.

Speaker #2: Looking ahead, its strong generation, retail, and development capabilities are expected to strengthen Sembcorp's earnings base, enhance recurring cash flows, and add further resilience to Sembcorp's diversified portfolio.

Speaker #2: I would like to touch on this growing wave—and what some people call a 'tsunami'—of AI and data center demand. As you all know, AI and data center growth is increasingly becoming relevant to our portfolio.

Speaker #2: New data center bids require both power supply reliability and a credible pathway to low-carbon energy. This plays to Sembcorp's strength, given our integrated energy portfolio and the suite of lower-carbon solutions.

Speaker #2: In Singapore, we are a trusted partner to data center and digital infrastructure customers, with over one gigawatt of power purchase agreements secured. I'm pleased to share the latest development: Senoko has entered into an arrangement with Micron for the development of a direct connection infrastructure.

Wong Kim Yin: I am pleased to share that as the latest development, Senoko has entered into an arrangement with Micron for the development of a direct connection infrastructure. As you know, Senoko and Micron, their facilities are next to each other in the northern part of Singapore. This direct connection infrastructure is an important step for Senoko to support the power supply needs of Micron's advanced wafer fabrication facility, the current as well as future developments. Other than Singapore, in the UK, our Wilton site provides a strong platform for data center development. Phase 1 with 200 MW of data center capacity is currently under planning. Wilton might be the only one, if not one of very, very few platforms that is able to deliver 280 MW by 2028.

Speaker #2: As you know, Senoko and Micron—their facilities are next to each other in the northern part of Singapore. So, this direct connection infrastructure is an important step for Senoko to support the power supply needs of Micron's advanced wafer fabrication facility, both for current and future developments.

Speaker #2: Other than Singapore, in the UK, our Wilton site provides a strong platform for data center development. Phase one, with 200 megawatts of data center capacity, is currently under planning.

Speaker #2: We, Wilton, might be the only one, if not one of very, very few platforms, that is able to deliver 280 megawatts by 2028. Many players have land, but in order to secure power to the land, it will take them into the 2030s before the commissioning of any data centers that will come along.

Wong Kim Yin: Many players have land but in order to secure power to the land, it will take them into the 2030s before the commissioning of any data centers that will come along. Wilton in the UK has a very precious commodity, in the form of the powered land that is available by 2028 and in utility scale of 280 MW. The site is very well positioned with immediate grid connection, ready infrastructure, as well as water availability. I spoke about Singapore and UK. In Australia, Alinta has a coast-to-coast integrated energy platform with 3.4 GW of operational, thermal, and renewables capacity. In generation, retail, and development capabilities position Alinta very well to serve growing AI-driven power demand. Closer to home across ASEAN, we have established data center footholds in Vietnam and Indonesia.

Speaker #2: So Wilton in the UK has a very precious commodity in the form of the powered land that is available by 2028 and in utility scale of 280 megawatts.

Speaker #2: So the site is very well positioned with immediate grid connection, ready infrastructure, as well as water availability. I spoke about Singapore and the UK. And in Australia, Alinta adds a coast-to-coast integrated energy platform with 3.4 gigawatts of operational thermal and renewables capacity.

Speaker #2: In generation, retail, and development capabilities position Alinta very well to serve the growing AI-driven power demand. And closer to home, across ASEAN, we have established data center footholds in Vietnam and Indonesia.

Speaker #2: In Vietnam, we received investment approval to develop a data center within Saigon Hi-Tech Park, very near to Ho Chi Minh City. Well, in fact, it is in Ho Chi Minh City.

Wong Kim Yin: In Vietnam, we received investment approval to develop a data center within Saigon Hi-Tech Park, very near to Ho Chi Minh City. In fact, it is in Ho Chi Minh City. In Indonesia, we have told you that Batam is an emerging location for data centers supported by its connectivity to Singapore with submarine cable networks. Across all these markets, we have got platforms, ready platforms, that are able to capture the structural growth in digital infrastructure demand, leveraging on our existing power, renewables, and urban capabilities. The H2 of the year will start with a very positive note. For the Gas and Related Services, in July, it was a very strong month. USEP prices in Singapore averaged SGD 240 per megawatt hour. This of course, creates opportunities for our GRS team to capture value from the spot market.

Speaker #2: In Indonesia, we've told you that Batam is an emerging location for data centers, supported by its connectivity to Singapore with submarine cable networks. So, across all these markets, we have got platforms—ready platforms—that are able to capture the structural growth in digital infrastructure demand.

Speaker #2: Leveraging on our existing power renewables and urban capabilities, the second half of the year will start on a very positive note. For the gas and related services, July was a very strong month.

Speaker #2: You said prices in Singapore averaged $240 per megawatt hour. And this, of course, creates opportunities for our GIS team to capture value from the spot market.

Speaker #2: And this is, of course, markedly improved from the first half. Alinta also delivered a strong performance in July across both the east and west coast markets of Australia during this peak winter period.

Wong Kim Yin: And this is of course, markedly improved from the H1. Alinta also delivered a strong performance in July across both the East and West Coast markets of Australia during this peak winter period. The business should continue to benefit from favorable market conditions as well as resilient customer growth. In India, our Renewables business also performed well, supported by higher wind resource across the entire portfolio. These are all developments that underscore our confidence in the group's outlook for the full year. I want to emphasize on the strength of that confidence. The board has supported us to increase our dividend to SGD 0.11, despite a weaker performance in the H1.

Speaker #2: The business should continue to benefit from favorable market conditions, as well as resilient customer growth. In India, our renewables business also performed well, supported by higher wind resource across the entire portfolio.

Speaker #2: So, these are all developments that underscore our confidence in the group's outlook for the full year. I want to emphasize, on the strength of that confidence, the board has supported us to increase our dividend to 11 cents.

Speaker #2: Despite a weaker performance in the first half, this is part of our effort to recognize that our dividend payout is lagging our peer group, and is part of our recognition to level up to our peer group in terms of the dividend payout, moving forward.

Wong Kim Yin: This is part of our effort in recognition that our dividend payout is lagging our peer group and is part of this recognition to level up to our peer group in terms of the dividend payout going forward. I will now hand over to Eugene. He will tell you more about the financials and the details before we go into the Q&A. Thanks.

Speaker #2: I will now hand over to Eugene. He will tell you more about the financials and the details before we go into Q&A. Thanks.

Speaker #1: Thank you, Kim Min. Now, we move on to the first slide. So, on an overall basis, all the factors that Kim Min talked about flowed through—right—into our underlying net profit, which are purely on a reported performance basis.

Eugene Cheng: Thank you, Kim Yin. Now we move on to the first slide. On an overall basis, all the factors that Kim Yin talked about flow through into our underlying net profit, which are purely on a reported performance basis. Our underlying net profit was down 25% from SGD 491 million to SGD 369 million. I think from a pro forma perspective, if we had seen what Alinta would have contributed to show what a full H1 run rate would have been for us this year, that would have been SGD 558 million. Now, there are a few items below the underlying net profit to take note. I think, in terms of the DPN Forex loss, the India rupee continued to depreciate slightly against the Singapore dollar, and hence a SGD 57 million mark-to-market loss, markedly lower than last year. We did see the India rupee turn slightly in Q2 of this year.

Speaker #1: Our underlying net profit was down 25%, from $491 million to $369 million. I think, from a pro forma perspective, if we had seen what Alinta would have contributed, it would kind of show what a full first-half run rate would have been for us this year, right?

Speaker #1: That would have been $558 million. Now, there are a few items below the underlying net profit to take note of. I think, in terms of the DPN forex loss, the Indian rupee continued to depreciate slightly against the Singapore dollar and hence a $57 million mark-to-market loss, markedly lower than last year, right?

Eugene Cheng: Now, there are a few items below the underlying net profit to take note. I think, in terms of the DPN Forex loss, the India rupee continued to depreciate slightly against the Singapore dollar, and hence a SGD 57 million mark-to-market loss, markedly lower than last year. We did see the India rupee turn slightly in Q2 of this year.

Speaker #1: We did see the Indian rupee turn slightly in Q2 of this year. Now, the fair value loss on energy derivatives of $10 million – that's purely mark-to-market as of the 30th of June position of Alinta's hedge positions.

Eugene Cheng: Now, the fair value loss on energy derivatives of SGD 10 million, that's a purely mark-to-market as of 30 June position of Alinta's hedge positions. So not reflective of what cash flows have been as of the 30 of June. And the exceptional items of SGD 152 million comprises SGD 155 million of transaction costs. That is in relation to the acquisition of Alinta, offset by SGD 3 million from a gain from divestment in the China water portfolio. Now, this SGD 155 million is largely substantially all the cost already for the transaction. Some of you may ask why is it lower than what was previously guided, which was closer to SGD 190-plus million. The reason was because in the previous guidance of the transaction cost, we have included in there the possible breakage cost of refinancing certain US private placement debt facilities.

Speaker #1: So, not reflective of what cash flows have been as of 30th of June. And the exceptional items of $152 million comprise $155 million of a transaction cost that is in relation to the acquisition of Alinta.

Speaker #1: Offset by $3 million from a gain from divestment in the China Water portfolio. Now, this $155 million is largely, substantially, all the costs already for the transaction.

Speaker #1: Now, some of you may ask why it is lower than what was previously guided, which was closer to $190 million plus. The reason is because, in the previous guidance of the transaction cost, we had included the possible breakage cost of refinancing certain US private placement debt facilities.

Speaker #1: So, we were fortunate that upon the completion of the transaction, many of these US private placement debt investors actually saw the credit improve and hence were more than happy to stay.

Eugene Cheng: We were fortunate that upon the completion of the transaction, many of these US private placement debt investors actually saw the credit improve and hence were more than happy to stay. That is a savings in terms of the transaction costs. Now, if we move on to the next slide, I will go into detail in terms of group net profit impact. For the Gas and Related Services as a segment, we did see a 14% or a SGD 45 million decline year-on-year in terms of our net profit. You have seen from the earlier slide that for Singapore, it declined by about SGD 33 million. The contributory factors of that is really a result of lower spreads from recontracting both across the Sembcorp as well as the Senoko portfolio through 2025 and coming into the earlier part of 2026.

Speaker #1: So, you know that is a savings in terms of the transaction costs. Now, if we move on to the next slide, I will go into detail in terms of group net profit impact.

Speaker #1: Now for the gas and related services, as a segment, right, we did see a 14% or a 45 million decline year on year in terms of our net profit.

Speaker #1: Now, you have seen from the earlier slide that for Singapore, it declined by about $33 million. The contributory factors of that are really, you know, a result of lower spreads from re-contracting, both across the Sembcorp as well as the Senoko portfolio.

Speaker #1: Through 2025 and coming into the earlier part of 2026. Now, in general, our overall portfolio average spreads declined by about $8 per megawatt hour to average, you know, around the low 50s.

Eugene Cheng: In general, our overall portfolio average spreads declined by about SGD 8 per megawatt hour to average around the low fifties. We also saw a couple of things. In the H1 of 2026, there were some one-off gains, including cargo diversion gains that we were not able to realize in the H1 of this year. Also, there were some gas cost increase in Senoko as a result of gas curtailment, but the impact is small. Probably we are talking about a SGD 4 million type impact. All this contributed overall to a decline of SGD 33 million from Singapore year-on-year. The UK saw a close to a SGD 22 million decline year-on-year. As guided at the earlier part of this year, we did see a loss of customers, petrochemical customers, and as a result, also a demand from them.

Speaker #1: Now, we also saw a couple of things. In the first half of 2026, there were some one-off gains, including cargo diversion gains, that we were not able to realize in the first half of this year.

Speaker #1: And also, you know there was some gas cost increase in Senoko as a result of a gas curtailment, but that impact is small. Probably, we are talking about a $4 million type impact.

Speaker #1: So all this, you know, contributed overall to a decline of about $33 million from Singapore year on year. Now, the UK saw a close to $22 million decline, year on year.

Speaker #1: And as guided at the earlier part of this year, we did see a loss of customers, specifically petrochemical customers. And as a result, also a decline in demand from them.

Speaker #1: We are, you know, working as a team in talking about, you know, re-designating, you know, Wilton for the use of AI as well as data centers.

Eugene Cheng: We are working, as Kim Yin talking about, redesignating Wilton for the use of AI as well as data centers, and we are looking into the H2 to see if something materialize. For the rest of the world in the Gas and Related Services, we actually saw a SGD 7 million improvement year-on-year across the different countries coming from various factors, cost savings, efficiency gains and so forth. So that's the Gas and Related Services segment. I'll talk about Renewables first. The Renewables segment saw a decline of 48% or SGD 63 million year-on-year. I think in the H1 of this year and you would have seen also the earnings announcements as well as profit guidance from pure Renewables companies in China and also some in India, that one key element that was quite common across the Renewables business was resource. Right.

Speaker #1: And we will, you know, we are looking into the second half to see if something materializes. Okay. Now, for the rest of the world in the gas and related services, we actually saw a $7 million improvement year on year across the different countries, coming from various factors—cost savings, efficiency gains, and so forth.

Speaker #1: So that's the Gas and Related Services segment. Now I'll talk about Renewables. First, the Renewables segment saw a decline of 48%, or $63 million, year-on-year.

Speaker #1: I think in the first half of this year, and you would have seen also the earnings announcements, as well as profit guidance from pure renewables companies in China and also some in India.

Speaker #1: That one key element that was quite common across the renewables business was resource. Right. So we did see a weak resource across both wind and solar in across you know China, some a little bit of India, as well as the Southeast Asia.

Eugene Cheng: We did see a big resource across both wind and solar, across China, a little bit of India, as well as Southeast Asia. So the impact of resource in the H1 of this year actually saw a close to SGD 40 million impact of the SGD 63 million that we talked about. China basically saw close to a SGD 30 million of the SGD 40 million impact. Specifically for China, we also saw a couple of other impacts. One, we did talk about the VAT that was lost. It was a SGD 12 million full year, so SGD 6 million of that came through in the H1.

Speaker #1: So, the impact of Resource in the first half of this year actually saw a $40 million impact, close to $40 million of the $63 million that we talked about.

Speaker #1: And China basically saw close to $30 million of the $40 million impact. Okay. And specifically for China, we also saw a couple of other impacts.

Speaker #1: We did talk about the VAT that was lost—it was $12 million for the full year. So, you know, $6 million of that came through in the first half.

Speaker #1: And in addition to that, we also saw a further $6 million impact as a result of lower market trading tariffs for the portion of the China portfolio that has to be put on market trading as a result of the move towards more market trading.

Eugene Cheng: In addition to that, we also foresaw a further SGD 6 million impact as a result of lower market trading tariffs for the portion of the China portfolio that has to be put on market trading as a result of the move towards more market trading by the various provinces. Specifically for curtailment, it is rather mixed. We did see curtailment improve for certain provinces. That includes areas like Guangxi, Yunnan, as well as Guizhou. We did see worsening in some other regions as well, particularly in Hunan, where hydro output was high and increased. Hence, there was increased curtailment across solar and wind, and also in Ningxia itself, where there was a one-off outage of a cross-province transmission line for inspection. In the second bucket of curtailment impacts, at least at this point in time, it doesn't look like it's systemic.

Speaker #1: By the various provinces. Specifically for curtailment, it is rather mixed. We did see curtailment improve for certain provinces; that includes areas like Guangxi, Yunnan, as well as Guizhou.

Speaker #1: And, you know, we did see worsening in some other regions as well—particularly in Hunan, where hydro output was high and increased. Hence, there was, you know, increased curtailment across solar and wind.

Speaker #1: And also in Ningxia itself, where there was a one-off outage of a cross-province transmission line for inspection. So, in the second bucket of curtailment impacts, at least at this point in time, it doesn't look like a systemic issue.

Speaker #1: Now, the northwestern part remains elevated and unchanged. So, you know, curtailment remains high in the northwestern part of the country, right? I think for India, there was some resource impact in the first half, particularly over wind.

Eugene Cheng: The northwestern part remains elevated and unchanged. So curtailment remains high in the northwestern part of the country. For India, there was some resource impact in the H1, particularly over wind. But as Kim Yin has highlighted, we did see a strong improvement of that in July. For our storage portfolio, which is largely centered around the UK, we did see batteries prices decline by about SGD 5 million in the H1, driven purely by supply and demand dynamics in the market. So basically, that accounts for the Renewables performance, and a big part of it is really due to resource in the H1. For Integrated Urban Solutions, net profit declined by SGD 16 million. Of course, SembWaste no longer contributes, so that in itself contributed to a SGD 10 million decline.

Speaker #1: But as Kim Min has highlighted, we did see a strong improvement in that in July. Now, for our storage portfolio, which is largely centered around the UK, we did see battery prices decline by about $5 million in the first half.

Speaker #1: Driven purely by supply and demand dynamics in the market. So basically, that accounts for the renewables performance, and a big part of it is really due to resource in the first half.

Speaker #1: Okay. For integrated urban solutions, net profit declined by $16 million, and of course you know Sembway is no longer contributing, so that in itself contributed to a $10 million decline.

Speaker #1: Now, Urban saw a $4 million decline year on year, but that is really contributed by a delay in the recognition of KIK's 40-hectare land sales.

Eugene Cheng: Urban saw a SGD 4 million decline year on year, but that is really contributed by a delay in the recognition of KIK's 40 hectare of land sales. Again, in the H1 of this year, we did see more rainy days, and hence the land preparation and resettlement was a little delayed. But I am very happy to say that we have completed the handover to their customer, and we have booked their earnings in August. It will be booked in August, and that's about SGD 11 million. So see it as SGD 11 million, which would otherwise have been booked in the H1, essentially moved into August. So all in all, IUS, apart from some timing of land sales, no real surprises there. I will talk a little bit about Alinta. We closed the Alinta transaction on 11 June 2026. Hence, not any meaningful recognition.

Speaker #1: Now again, you know, in the first half of this year, we did see more rainy days, and hence the land preparation and resettlement was a little delayed.

Speaker #1: But I'm very happy to say that we have completed the handover to the customer, and we have booked that earnings in August.

Speaker #1: It will be booked in August, and that's about $11 million. So, see it as $11 million, which would otherwise have been booked in the first half, essentially moved into August.

Speaker #1: So all in all, RUS, apart from, you know, some timing of land sales, no real surprises there. And I'll talk a little bit about Alinta.

Speaker #1: So, we closed the Alinta transaction on 11th June 2026. Hence, you know, not any meaningful recognition. But I think it's important to note that the first half performance was strong.

Eugene Cheng: But I think it's important to note that the H1 performance was strong. We saw AUD 231 million contribution from Alinta in the H1 on a full half basis, which was a meaningful growth year on year. It's important to note that from that AUD 231 million, AUD 100 million of that is really from optimizing our green certificates portfolio against a certain offtake, and it will not be repeated in the H2. But we do have visibility of these optimization opportunities into 2027. Decarbonization solutions. Essentially, we did see our losses narrowed by SGD 5 million, and that is really driven through a tightened cost control. From a corporate perspective, interest cost increased slightly, SGD 3 million. That is really for the purpose of funding the acquisition of Alinta in June.

Speaker #1: Right. We saw a $231 million contribution from Alinta in the first half on a full-half basis, which was meaningful growth year on year.

Speaker #1: Now, it's important to note that from that $231 million, $100 million of that is really from, you know, optimizing our green certificates portfolio. Right?

Speaker #1: Against a certain offtake, and it will not be repeated in the second half. But you know, we do have visibility of these optimization opportunities into 2027.

Speaker #1: Decarbonization solutions: essentially, we did see our losses narrowed by $5 million, and that is really driven through tightened cost control. From a corporate perspective, interest cost increased slightly, by $3 million.

Speaker #1: That is really for the purpose of funding the acquisition of Alinta in June. And our overall corporate cost, we did tighten by $6 million, which is the result of tightened cost management as well.

Eugene Cheng: Our overall corporate cost, we did tighten by SGD 6 million, which is a result of a tightened cost management as well. In terms of other business, which really comprises our specialized construction business as well as the mint business, it declines slightly, but this is really as a result of the timing of a percentage of completion recognition of the projects that the specialized construction management business is operating. All in all, those are the key segmental operational updates in H1 that really explains the results. Moving on to our group capital expenditure. We have significantly tightened CapEx and investment spending, excluding Alinta, where we did SGD 257 million of CapEx and investment spend in H1 2026 relative to SGD 567 million the year before. Of course, the equity payment for Alinta was close to SGD 4.4 billion that outflowed in June of this year.

Speaker #1: In terms of other business, which really comprises our specialized construction business as well as the mint business, it declined slightly, but this is really as a result of the timing of percentage-of-completion recognition of the projects that are in the specialized construction management business.

Speaker #1: It's operating. So, all in all, those are the key segmental operational updates in the first half that really, you know, explain the results. Now, moving on to our group capital expenditure.

Speaker #1: We have significantly tightened capex and investment spending excluding Alinta, where we did $257 million of capex and investment spend in the first half of 2026, relative to $567 million the year before.

Speaker #1: And of course, you know the equity payment for Alinta was close to $4.4 billion. That was an outflow in June of this year.

Speaker #1: Now, when we move over to the free cash flow, okay, this is the next slide. So this is the slide where I have to, you know, go into some details in terms of reconciliation.

Eugene Cheng: Now, when we move over to free cash flow, this, which is the next slide. This is the slide where I have to go into some details in terms of reconciliation. Now, I have to talk about some numbers to put H1 2025 and H1 2026 on a like-for-like basis. In H1 2025, we reported a free cash flow of SGD 1.3 billion. Out of that SGD 1.3 billion, if you look into the cash flow statement, you will realize that SGD 383 million of that is really proceeds from the sale of SembWaste. If you remove that, our H1 free cash flow would have been SGD 930 million. SGD 930 million for H1 2025. Now, if we look in H1 2026, our free cash flow were impacted by three key things.

Speaker #1: Okay. Now I have to, you know, talk about some numbers to put first half '25 and first half '26 on a like-for-like basis.

Speaker #1: Okay. So in first half '25, we reported a free cash flow of $1.3 billion. But out of that $1.3 billion, if you look into the cash flow statement, you will realize that $383 million of that is really proceeds from the sale of Sembways.

Speaker #1: So if you remove that, our first half free cash flow would have been $930 million. Okay, $930 million for the first half of 2025.

Speaker #1: Now, if you look at the first half of 2026, our free cash flow was impacted by three key things. Number one, Alinta's transaction cost: $155 million.

Eugene Cheng: Number one, Alinta's transaction cost, SGD 155 million. That clearly wasn't incurred last year. There was also SGD 80 million of a prepayment in relation to for the commencement of a project that sits in our working capital. Of course, that will reverse itself out later. Then in terms of our deferred payment note receipts, there was a slight delay in the advance flow. About SGD 90 million of that will flow into Sembcorp in August this year rather than in the May or June period. When you adjust the free cash flow of SGD 373 of all that, you will end up at SGD 700 million.

Speaker #1: So you know, that clearly wasn't incurred last year. There was also $80 million of a prepayment in relation to Tawila C for the commencement of a project that sits in, you know, working capital.

Speaker #1: But of course, that will reverse itself out later. And then in terms of our deferred payment note receipts, there was a slight delay in the funds flow.

Speaker #1: So about $90 million of that will, you know, flow into Sembcorp in August this year, rather than, you know, in the May-June period.

Speaker #1: So, when you adjust the free cash flow of $373 million and all that, you will end up at $700 million. So, the difference of $130 million for first-half free cash flow, you would notice that it roughly ties in with the underlying net profit decline.

Eugene Cheng: The difference of SGD 130 million of the H1 free cash flow, you would notice that it would tie in roughly with the underlying net profit decline, of which, as Kim Yin mentioned earlier, we do expect the H2 to be stronger. When we look at the group borrowings, our net debt right now sits at about SGD 13.9 billion, and it increased by about SGD 6 billion. Most of it is a result of the acquisition of Alinta, the equity purchase price, as well as consolidating Alinta's net debt. We also continue to deploy capital for the completion of CCP4 and also the execution of our ongoing pipeline in SGI, which is our India renewables. It is important to note that we have reported our net debt to adjusted EBITDA on a H1 pro forma basis. What does that mean?

Speaker #1: Of which as mentioned as Kimin mentioned earlier, we do expect a second half to be stronger. So when we look at the group borrowings, our net debt right now sits at about 13.9 billion.

Speaker #1: And it increased by about $6 billion. Most of it is a result of the acquisition of Alinta—the equity purchase price, as well as consolidating Alinta's net debt.

Speaker #1: And we also continue to deploy capital for the completion of CCP4, and also the execution of our ongoing pipeline in SGI, which is our India renewables.

Speaker #1: Now, it is important to note that we are reporting our net debt to adjusted EBITDA on a first-half pro forma basis. So, what does that mean?

Speaker #1: So we took our first half, including Alinta, you know, for the full half run rate. But of course, we excluded roughly $100 million of the LGCs again from Alinta.

Eugene Cheng: We took our H1, including Alinta, for the full half run rate, but of course, we excluded roughly SGD 100 million of the LGCs gain from Alinta, because we do not expect that to be repeated in the H2. On an annualized basis, that comes up to a net debt to adjusted EBITDA of 5.3 times, which is roughly expected as a result of the completion of the transaction. We remain very confident that with the continued cash flow as well as some growth expected in Alinta, the delivery of a CCP4 going forward, as well as continued development of the pipeline in India, as well as a possible capital recycling exercises, we will deleverage in the coming years to come. In terms of the group debt profile, I think from the debt maturity profile, it hasn't changed a lot.

Speaker #1: Because we do not expect that to be repeated in the second half. And on an annualized basis, that comes up to a net debt to adjusted EBITDA of 5.3 times.

Speaker #1: Which is roughly expected as a result of the completion of the transaction. Now we remain very confident that with the continued cash flow as well as the some growth expected in Alinta, the delivery of a CCP4 going forward, as well as you know continued development of the pipeline, in India, as well as a possible you know capital recycling exercises we will, we will deleverage in the coming years to come.

Speaker #1: Now, in terms of the group debt profile, I think you know from a debt maturity profile, it hasn't changed a lot, right? You will notice that our weighted average debt maturity has actually improved slightly, in spite of rolling forward one quarter.

Eugene Cheng: You will notice that our weighted average debt maturity actually have improved slightly in spite of a rolling forward one quarter and funding from Alinta. Also, our weighted average cost of debt came down from 4.5% to 4.3%. That was because the funding of in raising the financing structures and debt for Alinta, we have achieved very attractive metrics. The weighted average cost of debt for the funding of Alinta's acquisition was 3.4%, and the weighted average tenor for the Alinta funding package was about 6.6 years. Okay? So very strong financing metrics. You will notice that our hedging profile has come down from the 70-ish percent down to a 57% fixed. That is because in the funding of Alinta, about SGD 1.6 billion of debt, we are now using a two-year revolving credit facility at very low cost.

Speaker #1: And funding, you know, from Alinta. And also, our weighted average cost of debt came down from 4.5% to 4.3%. That was because, you know, with the funding and raising of the financing structures and debt for Alinta, we have achieved very attractive metrics.

Speaker #1: The weighted average cost of debt for the funding of Alinta's acquisition was 3.4%, and, you know, the weighted average tenor for the Alinta funding package was about 6.6 years.

Speaker #1: Okay, so very strong financing metrics. Now, you will notice that our hedging profile has come down from the 70-ish percent to about 57% fixed.

Speaker #1: Now, that is because in the funding of Alinta, about $1.6 billion of that, we are now using a two-year revolving credit facility at very low cost.

Speaker #1: That in itself is close to about 1.5% in terms of interest cost. So, the reason why we did that was because, with this RCF, we would be better able to strategically tap, you know, the different types of markets.

Eugene Cheng: That in itself is close to about 1.5% in terms of interest costs. The reason why we did that was because, with this RCF, we would be better able to strategically tap the different types of markets, whether it is the bank market or the long-term bond market, to term out that two years RCF. I think in addition to that, if we have a two-year runway to term it out, it also give us the opportunity to reduce that SGD 1.6 billion to pay down. So we may not need the full SGD 1.6 billion in a long-term permanent debt, which obviously on average will be at higher cost. That is the strategy that we chose to take.

Speaker #1: Whether it is the bank market or the long-term bond market to term out that two-year RCF, right? I think in addition to that, if we have a two-year runway to term it out, it also gives us the opportunity to reduce that $1.6 billion through pay downs.

Speaker #1: So we will not need the full $1.6 billion in long-term permanent debt, which obviously, on average, will be at a higher cost.

Speaker #1: So that is the strategy that we chose to take. So in short, it simply means that that 57% fixed ratio set at risk parameters, or else equal, you will expect that to increase as we are terming out the $1.6 billion two-year RCF.

Eugene Cheng: In short, it simply means that the 57% fixed ratio, ceteris paribus or else equal, you will expect that to increase as we term out the SGD 1.6 billion two-year RCF. But all in all, we are very pleased that we achieved very, very competitive terms as well as the cost of financing for the acquisition of Alinta, which is also a testament of the financier's view of the asset that we acquired, led by a very strong management team, led by Jeff. The last one is to talk about group liquidity. Our cash and equivalents have increased as a result of the consolidation of Alinta. Our unutilized committed facilities also increased from SGD 2.5 billion to SGD 3.6 billion. So more than ample liquidity across the whole group. I'll talk a little bit about the outlook. The outlook statement in itself, I wouldn't read it.

Speaker #1: But all in very competitive terms, as well as the cost of financing for the acquisition of Alinta, which is also testament to the financiers' view of the asset that we acquired, led by a very strong management team, led by Jeff.

Speaker #1: And the last one is to talk about group liquidity. Our cash and equivalents have increased as a result of the consolidation of Alinta. Our unutilized committed facilities also increased from $2.5 billion to $3.6 billion.

Speaker #1: So, more than ample liquidity across the whole group. Now I'll talk a little bit about the outlook. The outlook statement in itself—I wouldn't read it.

Speaker #1: I'll leave it to you to read it yourself. But I will talk about the different segments in greater detail. For gas and related services, I think we know the first half 2026 backdrop.

Eugene Cheng: I'll leave it to you to read it in itself, but I will talk about the different segment in a greater detail. For the Gas and Related Services, I think we know the H1 2026 backdrop, where we saw weaker performance because of lower recontracted spreads and certain gas curtailment and also UK market softness. As we head into the H2 2026, directionally, we expect H2 2026 to be meaningfully higher than the H1. There are three key areas to take note. Number one, we will have higher levels of retail and vesting contracts that we'll be generating for in the H2 compared to the H1, and these are also contracts with slightly better spreads. Secondly, we do see portfolio optimization opportunities.

Speaker #1: Right. We saw weaker performance because of lower recontracted spreads and certain gas curtailment, as well as softness in the UK market. But as we head into the second half of 2026, directionally, we expect the second half of 2026 to be meaningfully higher than the first half.

Speaker #1: Now there are three key areas to take note. Number one, we were as we will have higher levels of a retail and a vesting contracts that will be generating that will be generating for in the second half.

Speaker #1: Compared to the first half, these are also contracts with slightly better spreads. Secondly, we do see portfolio optimization opportunities. As a result of occurrences in the first half, we do have some excess gas in the second half.

Eugene Cheng: As a result of occurrences of the H1, we do have some excess gas in the H2, and with the additional capacity that CCP4 presents, we see the opportunity of potentially optimizing that gas. By optimizing that gas, it could be a sale of the gas, or it could be generating the gas into the pool. Of course, we have to see what gives us a stronger spark spreads, implied spark spreads. Of course, the third thing is CCP4 significantly are more efficient. You would see improvement in the spark spreads simply by heat rate efficiencies. Gas and Related Services. I think for Alinta in the H2. Well, back to our Gas and Related Services, Kim Yin has also highlighted, I think we also had a strong July month driven by a strong USEP outcome.

Speaker #1: And with the additional capacity that the CCP4 presents, we see the opportunities to potentially optimize that gas. By optimizing that gas, it could either be a sale of the gas or generating that gas into the pool.

Speaker #1: And of course, we have to see what gives us a stronger spark spread—implied spark spreads. And of course, the third thing is, CCP4 is significantly more efficient.

Speaker #1: So you would you would see improvement in the spark spreads. Simply by a heat rate efficiencies. So gas and related services. I think for Alinta in the second half, well okay back to a gas and related services came in as also highlighted.

Speaker #1: I think we also had a strong July month, driven by a strong USEP outcome, and we did see some pool gains. Now, for Alinta, for the second half, you have six months of contribution.

Eugene Cheng: We did see some pool gains. For Alinta, for the H2, you have 6 months of contribution. The performance will largely be supported by pretty favorable operating conditions and also our resilient customer book. In July in itself, Kim Yin also highlighted we see a strong trading performance across both West Coast as well as East Coast. At this point in time, I'm still holding on to the SGD 100 million contribution in the H2 for Alinta. For the Renewables segment, I think in the H2, performance is always seasonally lower than the H1. I think we will also continue to execute the growth pipeline. Of course, when you look at the schedule, we are not expecting a lot of a capacity contribution coming through in the H2.

Speaker #1: The performance will largely be supported by, you know, pretty favorable operating conditions and also our resilient customer book. Right. July itself also came in, and as highlighted, we see a strong trading performance across both, you know, the West Coast as well as the East Coast.

Speaker #1: But at this point in time, I'm still holding on to the $100 million contribution in the second half for Alinta. And then for the renewables segment, I think in the second half, you know, performance is always seasonally lower than the first half.

Speaker #1: Right. But I think that we will also continue to execute, you know, the growth pipeline. But of course, when you look at the schedule, we are not expecting, you know, a lot of capacity contribution coming through in the second half.

Speaker #1: The only point that I will note for the second half of 2026 is that we continue to watch closely the resource situation. I think you know there potentially would still be possible resource uncertainties, although in the month of July, factually, we did see both wind and solar resources improve.

Eugene Cheng: The only point that I will note for the H2 2026 is that we continue to watch closely the resource situation. I think there potentially would still be possible resource uncertainties, although in the month of July, factually, we did see both wind and solar resource improve against our expectations. We will have to continue to monitor how possible resource variations could take place in the next 5 months. For Integrated Urban Solutions, we certainly expect higher land sales simply by the timing of land sales. We have a clear visibility in terms of the pipeline that's underpinning the order book for the land sales. As mentioned earlier on, we have already confirmed the recognition of close to SGD 11 million as a result of the completion of the 40 hectares of land handover in KIK.

Speaker #1: Against our expectations. But you know, we will have to continue to monitor how possible resource variations could take place in the next five months.

Speaker #1: And for integrated urban solutions, we certainly expect higher land sales, simply due to the timing of those land sales. We have clear visibility in terms of the pipeline that's underpinning the order book for these land sales.

Eugene Cheng: We have a clear visibility in terms of the pipeline that's underpinning the order book for the land sales. As mentioned earlier on, we have already confirmed the recognition of close to SGD 11 million as a result of the completion of the 40 hectares of land handover in KIK. I think that completes my report in relation to the H1 2026. The key note is that we do expect the H2 to be meaningfully stronger than the H1, and July data shows the green shoots of that. Thank you, and open for Q&A.

Speaker #1: And as mentioned earlier on, we have really confirmed the recognition of close to $11 million as a result of the completion of the 40 hectares of land handover in KIK.

Speaker #1: So I think that, you know, that marks the completion of my report in relation to the first half of 2026. And the key note is that we do expect the second half to be meaningfully stronger than the first half.

Eugene Cheng: I think that completes my report in relation to the H1 2026. The key note is that we do expect the H2 to be meaningfully stronger than the H1, and July data shows the green shoots of that. Thank you, and open for Q&A.

Speaker #1: And July did show the green shoots of that. So thank you, and we'll open for Q&A. Thank you, Kim Min and Eugene. We will now proceed to the Q&A session.

Ling Xin Jin: Thank you, Kim Yin and Eugene. We will now proceed to the Q&A session. For those in the room, please raise your hand and a microphone will be brought to you. Kindly state your name as well as the organization that you represent before you ask your questions. Again, for the online participants, you can enter your questions in the Q&A box by clicking on the raise hand icon on the webcast page, and we will address your questions during this session as well. Shuki, please.

Xin Jin: Thank you, Kim Yin and Eugene. We will now proceed to the Q&A session. For those in the room, please raise your hand and a microphone will be brought to you. Kindly state your name as well as the organization that you represent before you ask your questions. Again, for the online participants, you can enter your questions in the Q&A box by clicking on the raise hand icon on the webcast page, and we will address your questions during this session as well. Shuki, please.

Speaker #1: For those in the room, please raise your hand and a microphone will be brought to you. Kindly state your name as well as the organization you represent before you ask your questions.

Speaker #1: And again, for the online participants, you can enter your questions in the Q&A box by clicking on the 'Raise Hand' icon on the webcast page, and we will address your questions during the session as well.

Speaker #1: Shuki please.

Speaker #3: Hi. Thanks for the opportunity. My first question is, the current spot spark spread has spiked. Has this been mainly driven by the force majeure? And if yes, when do you expect the overall spread—the spot spark spread—to be normalized?

[Analyst]: Hi. Thanks for the opportunity. My first question is current spot spark spread have spiked. Has this been mainly driven by the force majeure? If yes, when do you expect the overall spread to be spot, spark spread to be normalized?

Speaker #2: I okay. Me crystal ball right this one. Okay now just kidding. No I think Shuki in at least based on what we are monitoring we know that the USEP it's a it's always driven driven by marginal cost of SRMC.

Eugene Cheng: Okay. Need crystal ball on this one. Okay, just kidding. I think, Shuki, at least based on what we are monitoring, we know that the USEP, it is always driven by marginal cost of SRMC, right? The SRMC, of course, is a JKM. I think for many of you who have interacted with me post March up to May, June last year, the issue was that JKM has no conviction, right? Increase up to $18, and the next thing it comes back down 15, 14. I think through July, what we saw was a pretty firm JKM outlook, 20, $21-

Speaker #2: Right. And the key SRMC, of course, is JKM. I think for many of you who have interacted with me post-March up to May, June last year, you know the issue was that JKM has no conviction.

Speaker #2: Right. It increased up to $18, and then the next thing, it comes back down to 15, 14, you know. But I think through July, what we saw was a pretty firm JKM outlook—2021 dollars—and it remained that way.

Speaker #2: And you know, that's what really drives the USEP outcome. I think the reality is that it is hard to say, right, how that will hold out for the rest of the year.

Wong Kim Yin: And remain that way. That really drives the USEP outcome. I think the reality is that it is hard to see how that will hold out for the rest of the year. If you look at the forward curves, normalization of JKM, it seems to suggest that normalization of that is really post 2026 into 2027. Again, those are forward curves. It can change. I guess the point that I am trying to make is that we are seeing firmness in the JKM market, but of course, that situation could change. Yeah. The forward curve, however possible changes that can happen, that you can go away from. Today you look at forward curve, it has firmed. People can offer all kind of reasons why. Compared to the Ukraine situation, where suddenly there was a shortage and then prices spike up.

Speaker #2: But if you look at the forward curves, you know, normalization of JKM seems to—it seems to suggest that normalization of that is really post-2026, into 2027.

Eugene Cheng: If you look at the forward curves, normalization of JKM, it seems to suggest that normalization of that is really post 2026 into 2027. Again, those are forward curves. It can change. I guess the point that I am trying to make is that we are seeing firmness in the JKM market, but of course, that situation could change. Yeah. The forward curve, however possible changes that can happen, that you can go away from. Today you look at forward curve, it has firmed. People can offer all kind of reasons why. Compared to the Ukraine situation, where suddenly there was a shortage and then prices spike up.

Speaker #2: But again, those are forward curves; they can change. So, I guess the point I'm trying to make is that we are seeing firmness in the JKM market.

Speaker #2: But of course, you know that situation could change. Yeah.

Speaker #4: So the forward curve—however, possible changes can happen; that's the best you can go with, right? So today, you look at the forward curve—it has firmed.

Speaker #4: People can offer all kinds of reasons why, right? Compared to the Ukraine situation, you know, where suddenly there was a shortage and then prices spiked up.

Speaker #4: This time round, because of preparation, many economies are able to draw on their storage. Right. Maybe it has gotten to the point where some of this storage is being used up.

Wong Kim Yin: This time around, because of preparation, many economies are able to draw on their storage. Maybe it has gotten to the point where some of this storage is being used up. Maybe. Or it may be that the people are already factoring in that this situation in the Middle East is going to drag on, off. Because of that, they start to price it into their gas prices. If you remember, when we first looked at this, we were actually quite surprised that it did not go the way Ukraine did. Now, I think that the forward curve is the best way to think about where the market is heading. I do not think we can sit here and have a crystal ball and tell you that it is going to stay there forever.

Eugene Cheng: This time around, because of preparation, many economies are able to draw on their storage. Maybe it has gotten to the point where some of this storage is being used up. Maybe. Or it may be that the people are already factoring in that this situation in the Middle East is going to drag on, off. Because of that, they start to price it into their gas prices. If you remember, when we first looked at this, we were actually quite surprised that it did not go the way Ukraine did. Now, I think that the forward curve is the best way to think about where the market is heading. I do not think we can sit here and have a crystal ball and tell you that it is going to stay there forever.

Speaker #4: Maybe. Right. Or it may be that the people are already factoring in that this situation in the Middle East is going to drag.

Speaker #4: Right. On, off, on, off. And because of that, they start to price it into their gas prices. But if you remember, when we first looked at this, we were actually quite surprised that it didn't go the way Ukraine did.

Speaker #4: Right. But now, I think that the forward curve is the best way to think about, you know, where the market is heading.

Speaker #4: Right. So I don't think we can sit here and have a crystal ball and tell you that it's going to stay there forever. You know, but we also cannot offer any reasons why, but I was just trying to suggest some of the conventional wisdom. You ask AI today, you know, it will tell you that, oh, look, it used up the storage.

Wong Kim Yin: We also cannot offer any reasons why, but I was just trying to suggest some of the conventional wisdom. You ask AI today, it will tell you that, "Oh, look, the use of the storage." All that chewing up a lot of time, I was just trying to say that we do think that this time it could last at least for a short while. It probably will last, because there is no good reason for it to come down also. The demand is actually quite firm, and you can see new demand coming through over time. With demand holding out and the main factor being the supply, and if the supply side dynamics does not look like there is any possibility that the things will just dramatically improve from a supply side, then the forward curve should hold out.

Eugene Cheng: We also cannot offer any reasons why, but I was just trying to suggest some of the conventional wisdom. You ask AI today, it will tell you that, "Oh, look, the use of the storage." All that chewing up a lot of time, I was just trying to say that we do think that this time it could last at least for a short while. It probably will last, because there is no good reason for it to come down also. The demand is actually quite firm, and you can see new demand coming through over time. With demand holding out and the main factor being the supply, and if the supply side dynamics does not look like there is any possibility that the things will just dramatically improve from a supply side, then the forward curve should hold out.

Speaker #4: So, but all that is chewing up a lot of time. I was just trying to say that we do think that this time it could last, at least for a short while.

Speaker #4: Right. It probably will last because there’s no good reason for it to come down also. But the demand is actually quite firm, and you can see new demand coming through over time.

Speaker #4: So it's the way demand is holding out, and the main factor is the supply. And if the supply side dynamics don't look like there's any possibility that things will just dramatically improve.

Speaker #4: From a supply side, then the forward curve should hold out.

Speaker #3: Thanks. Then, just on the new plan coming in—which month will it come in?

[Analyst]: Thanks. Just on the new plant coming in, which month will it come in?

Speaker #4: It will be early part of Q3, early Q4, yes. It's already connected to the grid, it is already generating power, and we are already clocking revenue.

Wong Kim Yin: It will be early part of end Q3, early Q4. Yes. It is already connected to the grid. It is already generating power, and we are already clocking revenue. But it will be coming on progressively ramping up now. Of course, we would want to do more of that sooner than later. But it is already connected to the grid as we speak.

Speaker #4: But it will be coming on progressively, ramping up. Right. So, of course, we would want to do more of that sooner rather than later. But it is really connected to the grid as we speak.

Speaker #3: Okay, just have two more questions before I jump back to the Q. So just on that itself—if you use your crystal ball again—next year, we have so many new plans coming in.

[Analyst]: Okay. Just have two more questions before I jump back to the queue. Just on that itself, if you use your crystal ball again, next year, we have so many new plants coming in. How do you actually manage to rationalize your old plants or optimize your overall portfolio so that the market is rationale that the spot spreads don't come down because there are so many plants that are coming in?

Speaker #3: How do you actually manage to rationalize your old plants or optimize your overall portfolio so that the market is rational – that the spot spark spread doesn’t come down because there are so many plants that are coming in?

Speaker #4: I think what we have explained in the past is that, with the portfolio, right, we're not just going to pump all the electrons from the new plant, in addition to the old plant, into the system.

Wong Kim Yin: What we have explained in the past is that with the portfolio, we are not just going to pump all the electrons from that new plant in addition to the old plant into the system. What we have is a portfolio of customer contracts. We are using the more efficient plant, the new plant, to substitute out some of the less efficient plant to serve the customer. In so doing then, customer contracts don't change. Then, if you are able to burn less gas, you actually make money. So that is one effect. The other part of it is, of course, we told you about contracting strategy. With the bigger fleet of plant, that gives us that opportunity now to contract more aggressively. The contract portfolio, we are continuing to pursue that, and over time, the market share would then reflect the increase in the new plant.

Speaker #4: Right. Some of what we have is a portfolio of customer contracts. So we are using the more efficient plans, the new plans, to substitute out some of the less efficient plans to serve the customer. In so doing, the customer contracts don't change.

Speaker #4: Right. Then, if you are able to burn less gas, you actually make money. So that's one effect. The other part of it is, of course, we told you about the contracting strategy.

Speaker #4: So with the bigger fleet of plants, then that gives us that opportunity now to contract more aggressively, right? So, the contract portfolio we are continuing to pursue that, and then we would—over time—the market share would then reflect the increase in the new plant.

Speaker #4: So, what I'm trying to explain is that please don't expect that, you know, when 600 megawatts of plant get commissioned, then suddenly our revenue goes up by 600 megawatts.

Wong Kim Yin: What I am trying to explain is that, please don't expect that 600 megawatts of plant get commissioned, then suddenly our revenue goes up by 600 megawatts. It is not going to happen that way. What we are doing is using our fleet plant, and repeating myself, to respond to serve our customer portfolio. This customer contract portfolio will grow over time into the near future. So we feel actually pretty good about it. And net, there will be on the fringe additional revenue. As I told you just now, we are already connected to the grid. So for this H2 of the year, earlier we were thinking maybe it is October, November, full commissioning. And for purpose of financial projection, we started adding numbers into the budget for October, November.

Speaker #4: It's not going to happen that way. It will be responding what we're doing is using our fleet plan and repeating myself to respond to serve our customer portfolio and this customer contract portfolio will grow over time.

Speaker #4: Into the near future, so we feel actually pretty good about it. But net, there will be, on the fringe, additional revenue. As I told you just now, we are already connected to the grid.

Wong Kim Yin: As I told you just now, we are already connected to the grid. So for this H2 of the year, earlier we were thinking maybe it is October, November, full commissioning. And for purpose of financial projection, we started adding numbers into the budget for October, November. But we are clocking some of that revenue even as we speak, taking advantage of the plant being connected and taking advantage of the higher USEP in the market in the meantime. You okay with that? CFO always wants me to be, "Don't" Mayank, is it?

Speaker #4: So, for this second half of the year, earlier we were thinking maybe it's October, November, for full commissioning. Right? And for the purpose of financial projection, we started adding numbers into the budget for October, November.

Speaker #4: But we are clocking some of that revenue even as we speak, taking advantage of the plant being connected and taking advantage of the higher yield set in the market in the meantime.

Wong Kim Yin: But we are clocking some of that revenue even as we speak, taking advantage of the plant being connected and taking advantage of the higher USEP in the market in the meantime. You okay with that? CFO always wants me to be, "Don't" Mayank, is it?

Speaker #4: Okay. The CFO always wants me to be my Yang.

Speaker #3: Next. My Yang.

Speaker #4: Yeah.

Eugene Cheng: Mayank?

[Analyst]: Mayank?

Speaker #2: Yeah. My Yang from Morgan Stanley. So, coming in, first question for you: At a portfolio level, 40% of your book value now sits in renewables.

Wong Kim Yin: Yeah.

[Analyst] (Morgan Stanley): Yeah. Mayank from Morgan Stanley. Sukumin, first question for you at a portfolio level. 40% of your book value now sits in renewables, and obviously it has been a struggle for the last one and a half, two years now for you. How are you thinking about capital deployment and renewables? Because even in the first half, a large part of the CapEx went into Derek Celinda. Is there a rethink around capital allocation in renewables in itself? I think a related question on China, you said some of that capacity is now in the market on a spot basis. What percentage of your China renewables is now on spot?

Mayank Maheshwari: Yeah. Mayank from Morgan Stanley. Sukumin, first question for you at a portfolio level. 40% of your book value now sits in renewables, and obviously it has been a struggle for the last one and a half, two years now for you. How are you thinking about capital deployment and renewables? Because even in the first half, a large part of the CapEx went into Derek Celinda. Is there a rethink around capital allocation in renewables in itself? I think a related question on China, you said some of that capacity is now in the market on a spot basis. What percentage of your China renewables is now on spot?

Speaker #2: And obviously, it's been a struggle for the last one and a half to two years now for you. How are you thinking about capital deployment and renewables?

Speaker #2: Because even in the first half, a large part of the capex went into their Excellenta. So is there a rethink around capital allocation in renewables in itself?

Speaker #2: And I think a related question on China: You said some of that capacity is now in the market on a spot basis. What percentage of your China renewables is now on spot?

Speaker #4: Okay, I will ask Eugene to help me out with more details on the capital. But capital allocation is a reflection of your strategy, right?

Wong Kim Yin: Okay. I will ask Eugene to help me out with more details on the capital, but capital allocation is a reflection of your strategy, right? The short answer to your question is yes, the way we allocate capital is constantly adjusting, and when we see better opportunities, it will naturally attract the bulk of the capital, right? Alinta was the big opportunity in front of us in the last year. So we shifted. Yeah. So it is very clear how we allocate capital in that space. Renewables, from a longer term business perspective, we call ourselves an energy transition player. We believe that each of these sources of energy will continue to have a place in the energy mix of the customer. Customer, broadly speaking, could be countries and grids. So renewables will continue to have a place in many energy mixes. Yeah.

Speaker #4: So the short answer to your question is yes. The way we allocate capital is constantly adjusting. And when we see better opportunities, it will naturally attract the bulk of the capital.

Speaker #4: Right. So a linter was the big opportunity in front of us in the last year, so we shifted. Yeah. So it's very clear how we allocate capital in that space.

Speaker #4: From a longer-term business perspective, we believe that renewables are important. We call ourselves an energy transition player. We believe that each of these sources of energy will continue to have a place in the energy mix of the customer.

Speaker #4: Customers, broadly speaking, could be countries and grids, so renewables will continue to have a place in many energy mixes. Yeah. And you know, you saw what happened in the Middle East, and so on.

Wong Kim Yin: You saw what happened in the Middle East and so on. Everybody has some sun, everybody has some wind. So there will be that desire to deploy assets in order to capture some of this. So we will be selective in trying to capture this. So renewables is a place in which we will continue to be looking for opportunities. But now that we have had a portfolio, right, we know we got Singapore, which is where we are very strong, right? We frankly, please don't repeat to regulator. We are almost the only game in town. 60% of what is going out there is generated by us. China, we have a lot of experience. Not doing well at the moment because of all the reasons that we explained to you. But India, we have a very strong team as well, right?

Speaker #4: Everybody has some sun. Everybody has some wind. So there will be that desire to deploy assets in order to capture some of these. So we will be selective in trying to capture these, so renewables is a place in which we will continue to be looking for opportunities.

Speaker #4: But now that we have had a portfolio, right, we know we've got Singapore, which is where we are very strong, right? And, frankly, please don't repeat the regular.

Speaker #4: We only recently came into town. Sixty percent of what's going on out there is generated by us. In China, we've got a lot of experience. We're not doing well at the moment because of all the reasons that we explained to you.

Speaker #4: But in India, we have a very strong team as well, right? So, we are then in a very good position now to capture those opportunities that will come along.

Wong Kim Yin: So, we are then in a very good position now to capture those opportunities that will come along, the better ones. I am trying to paint a picture that renewables will always be there. We have a good position. We will leverage on our good position to capture this always be there, the better opportunities among them. Right? You can use the word selective, but selective might suggest very careful. But I am saying in the context of your capital allocation question, we are looking for the higher margins. Yeah. That is why we say that, look, in India, we continue to feel good because our portfolio of projects that are coming online, what we call pipeline, those are secured. They are all in hybrid projects where the margins are higher, and so we are comfortable with that.

Speaker #4: The better ones. So I'm trying to paint the picture that renewables will always be there. We have a good position. We will leverage on our good position to capture these always-there, the better opportunities among them.

Speaker #4: Right. So you can use the word "selective," but "selective" might suggest being very, very careful. But I'm saying, in the context of your capital allocation question, we're looking for the higher margins.

Speaker #4: Yeah, so that's why we say that, look, in India, we continue to feel good because our portfolio of projects that are coming online—what we call the pipeline—those are secured.

Speaker #4: They are all in hybrid projects where the margins are higher, and so we're comfortable with that. So then, in terms of moving forward with capital allocation, I spoke about renewables, but I also want to touch on gas and related.

Wong Kim Yin: Then in terms of moving forward, capital allocation, I spoke about renewables, but I also want to touch on Gas and Related Services. We continue to think that Gas and Related Services this season, and I am talking about five years, seven years, eight years, will continue to be very high in demand because this is the one fuel that is reasonably clean and yet able to provide very reliable power to meet this tsunami of demand coming from digital infrastructure. And we are seeing that in Singapore, as I told you. We are seeing that in the UK, right? People are coming to us. In a way, Wilton, a chemical customer exiting. At that time, we were all gloomy and all that. People sitting in front, it was like he went there so many trips to try to fix things.

Speaker #4: We continue to think that gas and related, this season—and I'm talking about five years, seven years, eight years—will continue to be very high in demand.

Speaker #4: Because this is the one fuel that is reasonably clean and yet able to provide very reliable power, to meet this tsunami of demand coming from digital infrastructure.

Speaker #4: And we're seeing that in Singapore, as I told you. We are seeing that in the UK, right? People are coming to us. So, in a way, Wilton—a chemical customer exiting at that time—we were all gloomy and all that.

Speaker #4: Vipu, sitting in front, it was like he went there so many times to try to fix things. But it turned out to be a blessing in disguise.

Wong Kim Yin: But it turned out to be a blessing in disguise because it compelled us to quickly pivot. And in that process, then suddenly we realized, we are the only site in the UK that can do 2028. So the players who want to do fast, and of course, if you talk to any data center people, they say, "I want it yesterday." So it position us in a very good position to cement that relationship. Gas, coming back to capital allocation again. Renewables, there will be allocation. Gas and Related Services, there will be allocation. And we will be directing it. I know it probably not the answer that you will be looking for, but it is a generic answer to say we will be directing it to. We will be chasing the higher margin projects. It is as simple as that.

Speaker #4: Because he compelled us to quickly pivot. And in that process, then suddenly we realized, you know, we are the only sites in the UK that can do 2028.

Speaker #4: So the players who want to do fast—and, of course, if you talk to any data center people, they say, "I want it yesterday."

Speaker #4: So it puts us in a very good position to cement that relationship. Coming back to capital allocation again, there will be allocation to renewables.

Speaker #4: Gas and related there will be allocation. And we will be directing it. I know it probably not answer that you'll be looking for but it's a generic answer that we'll be directing it to it will be chasing the higher margin projects.

Speaker #4: It's just simple as that.

Speaker #2: I think there's a second question on the proportion of the China portfolio that is now spot, right? Now, back in 2024, we were around 15% or so.

Eugene Cheng: I think there is a second question on the proportion of the China portfolio that is now spot, right? Back in 2024, we were around 15% or so, right, Gaikong? Because the. And I did guide the market that our expectation is that all the provinces will start moving more and more. Today, almost around 50% of the portfolio is a spot really. So they are accelerating that move.

Speaker #2: Right. Because the.

Speaker #4: And I did gather from the market that our expectation is that all the provinces will start moving more and more. So today, almost around 50% of the portfolio is spot, really.

Speaker #4: So there are accelerations that are moving.

Speaker #2: So that number should remain around that 50% range going forward, or do you think a larger part will go into there? No. I was just saying that, with that 50% now, will it ramp up closer to a bigger number as you kind of—

[Analyst] (Morgan Stanley): So that number should remain around that 50% range going forward, or you think a larger part will go into that?

Mayank Maheshwari: So that number should remain around that 50% range going forward, or you think a larger part will go into that?

Wong Kim Yin: 50% is basically FIT and PPA.

[Analyst] (Morgan Stanley): Hmm. No, I was just saying that will that 50% now ramp up closer to a bigger number as you kind of-

Mayank Maheshwari: Hmm. No, I was just saying that will that 50% now ramp up closer to a bigger number as you kind of-

Speaker #3: The revenues are roughly about a 50-50 split between the spot and secure.

Wong Kim Yin: The revenues are roughly about 50/50 split between the spot and secure.

Speaker #2: And that should remain around the same range going forward.

[Analyst] (Morgan Stanley): That should remain around the same range going forward.

Mayank Maheshwari: That should remain around the same range going forward.

Speaker #3: It will increase over time. Right.

Wong Kim Yin: It will increase over time, right?

Speaker #2: It will, yeah. Okay. I think the second question was a linter. While you had some very, very good quarters compared to your peers, especially AGL and Origin, when you look at their numbers as well.

[Analyst] (Morgan Stanley): It will increase.

Mayank Maheshwari: It will increase.

Wong Kim Yin: Yeah.

[Analyst] (Morgan Stanley): Okay. Yeah. I think the second question was Alinta. While you had some very good quarter compared to your peers, especially AGL and Origin, when you look at their numbers as well. Your net profit is still near breakeven, correct? If you look at H1. So question was more in terms of what did you guys do differently at the Alinta level versus the peers? Second thing is when we can see some ramp, or if you can just give us a bit of an idea around below the EBITDA line items around Alinta.

Mayank Maheshwari: Okay. Yeah. I think the second question was Alinta. While you had some very good quarter compared to your peers, especially AGL and Origin, when you look at their numbers as well. Your net profit is still near breakeven, correct? If you look at H1. So question was more in terms of what did you guys do differently at the Alinta level versus the peers? Second thing is when we can see some ramp, or if you can just give us a bit of an idea around below the EBITDA line items around Alinta.

Speaker #2: But your net profit is still near break-even, correct, if you look at the first half? So, the question was more in terms of what did you guys do differently at the linter level versus the peers.

Speaker #2: And the second thing is, when can we see some ramp-up, or if you can just give us a bit of an idea around those line items below, around a linter.

Speaker #4: Mayan, can you repeat that part—what you were saying about the breakeven, what was that?

Wong Kim Yin: Mayank, can you repeat that part where you were saying that the breakeven, what was the-

Speaker #2: The Linter, if you look at the net profit, was around $5 million for the...

[Analyst] (Morgan Stanley): The Alinta, if you look at the net profit, was around AUD 5 million for the-

Mayank Maheshwari: The Alinta, if you look at the net profit, was around AUD 5 million for the-

Speaker #4: Oh no, that is a lot, Mayank. Five million is because we completed the transaction on—.

Wong Kim Yin: Oh, no, that is. No. Mayank, AUD 5 million is because we complete the transaction on-

Speaker #2: Only just because of that. Okay, got it. Otherwise, what would be the—

[Analyst] (Morgan Stanley): It is just because of that.

Mayank Maheshwari: It is just because of that.

Wong Kim Yin: Yeah.

[Analyst] (Morgan Stanley): Okay, got it. Otherwise, what would be the full numbers?

Mayank Maheshwari: Okay, got it. Otherwise, what would be the full numbers?

Speaker #4: Full first half net income of a linter was $230,238.

Wong Kim Yin: The full H1 net income of Alinta was AUD 238 million.

Speaker #2: Okay. So that was the run rate that was normal AI, okay.

[Analyst] (Morgan Stanley): Okay. That was the run rate that was-

Mayank Maheshwari: Okay. That was the run rate that was-

Speaker #4: So the reason why we show the full first half is so that you know the run rate, but the $5 million was because we only complete on the 11th.

Wong Kim Yin: Yes

[Analyst] (Morgan Stanley): Normal Alinta. Okay, got it.

Mayank Maheshwari: Normal Alinta. Okay, got it.

Wong Kim Yin: The reason why we show the full H1 so that you know the run rate, but the 5 million was because we only complete on 11 July.

Speaker #2: Okay, so otherwise it's the normal run rate then. Okay, got it. Yeah.

[Analyst] (Morgan Stanley): Otherwise, it is the normal run rate then.

Mayank Maheshwari: Otherwise, it is the normal run rate then.

Speaker #4: Okay, yeah. You scared me. I was like, you stumped me.

Wong Kim Yin: Yeah.

[Analyst] (Morgan Stanley): Okay, got it.

Mayank Maheshwari: Okay, got it.

Wong Kim Yin: Okay, cool.

[Analyst] (Morgan Stanley): Yeah.

Mayank Maheshwari: Yeah.

Wong Kim Yin: You gave me a scare. You scared me. I was like-

[Analyst] (Morgan Stanley): You stumped me.

Mayank Maheshwari: You stumped me.

Speaker #2: Yeah. Okay, so the run rate is fine, but on the EBITDA line, the numbers were pretty good, correct? In the first half versus the peers.

Wong Kim Yin: You stumped me.

[Analyst] (Morgan Stanley): Yeah. Okay, run rate is fine, but in the EBITDA line, the numbers were pretty good, correct? In H1 versus the peers. Is there something that you can kind of give us an idea around, especially on the West Coast, the numbers were pretty good. Sorry, East Coast, sorry. Anything you want to kind of highlight?

Mayank Maheshwari: Yeah. Okay, run rate is fine, but in the EBITDA line, the numbers were pretty good, correct? In H1 versus the peers. Is there something that you can kind of give us an idea around, especially on the West Coast, the numbers were pretty good. Sorry, East Coast, sorry. Anything you want to kind of highlight?

Speaker #2: So is there something that you can kind of give us an idea around, especially on the west coast? The numbers were pretty good—sorry, east coast.

Speaker #2: Sorry. Is there anything you would like to highlight?

Speaker #4: We have an opportunity to introduce Jesse Murray. He's sitting right here. Jeff can give a little bit of a synopsis as to, you know, how you deliver superior results.

Wong Kim Yin: Maybe it is an opportunity to introduce Jeff Dimery.

[Analyst] (Morgan Stanley): Yeah, okay.

Mayank Maheshwari: Yeah, okay.

Wong Kim Yin: He is sitting right here. Let Jeff can give a little bit of a synopsis as to how you

[Analyst] (Morgan Stanley): Thanks

Mayank Maheshwari: Thanks

Wong Kim Yin: deliver superior results.

Speaker #5: Yeah, thank you, Kim Yun. I think the first point I would make, if you're looking at IGL and Origin, is that they don't have nearly the same exposure that Alinta has to the west coast of Australia.

Jeff Dimery: Yeah. Thank you, Kim Yin. I think the first point I would make, if you are looking at AGL and Origin, they do not have nearly the same exposure that Alinta has to the west coast of Australia. Obviously, they have commented on the market conditions in the east coast, where we are seeing a decline in forward prices, et cetera, at the moment. I would contrast that with the west coast of Australia, where we are seeing record prices. So we do have quite a bit of exposure there, and we are performing very strongly in that space. On the east coast of Australia, Kim Yin and Eugene both mentioned our play around the Renewables market, around the certificate contribution from the LGC. As Eugene pointed out, we have that same opportunity in 2027. So that will come to an end.

Speaker #5: And obviously, they've commented on the market conditions on the East Coast, where we're seeing a decline in forward prices, etc., at the moment. I would contrast that with the West Coast of Australia, where we're seeing record prices.

Speaker #5: So we do have quite a bit of exposure there, and we're performing very strongly in that space. On the east coast of Australia, Kim Yun and Eugene both mentioned our play around the renewables market, around the certificate contribution from the LGC, as Eugene pointed out.

Speaker #5: We have that same opportunity in 2027, so that will come to an end. It's part of the previous legislation around how we can, I guess, bank renewable certificates, and that scheme ends in 2030.

Jeff Dimery: It is part of a previous legislation around how we can, I guess, bank renewable certificates, and that scheme ends in 2030, so it will not be ongoing. Having said that, what I would say, and I note that the CEO of AGL also said this, when you look at the east coast market and the outlook in Australia, today the market prices are well below new entrant level. So we do not think that they are sustainable where they are or will get no new investment in capacity into the market. I say that against the backdrop, which is a global theme. We are seeing exceedingly strong demand for data centers. We are seeing an enormous push now into the electrification of vehicles off the back of what has happened in the Middle East.

Speaker #5: So it won't be ongoing. Having said that, what I would say—and I note that the CEO of AGL also said this—is that when you look at the east coast market and the outlook in Australia today, market prices are well below new entrant level.

Speaker #5: And so we don't think that they're sustainable where they are, or we'll get no new investment in capacity into the market. And I say that against the backdrop—which is a global theme—we're seeing exceedingly strong demand for data centers, we're seeing an enormous push now into the electrification of vehicles off the back of what's happened in the Middle East.

Speaker #5: So I guess the outlook we're saying is that prices are quite subdued on the east coast, but as we look forward with demand rising, we will need new capacity, and right now the signal is not there.

Jeff Dimery: I guess the outlook we are saying is that prices are quite subdued on the east coast, but as we look forward with demand rising, we will need new capacity. Right now, the signal is not there. So we expect, and I think our peers would equally expect to see a forward change in market conditions in the not-too-distant future. Having said that, the last point I would make is that whilst you are seeing declining forward curve relative to where it has been historically, we have been pretty well hedged, so we are insulated to an extent, both today and for the short-term future, in our portfolio management. So we are not anticipating, as I think the guys alluded to, we are very comfortable with the balance of calendar year and what the contribution is looking like.

Speaker #5: So we expect, and I think our peers would equally expect, to see a forward change in market conditions in the not-too-distant future.

Speaker #5: Having said that, the last point I would make is that, while you are seeing a declining forward curve relative to where it's been historically, we've been pretty well hedged.

Speaker #5: So, we are insulated to an extent—both today and for the short-term future—in our portfolio management. So we're not anticipating, you know, as I think the guys alluded to, we're very comfortable with the balance of the calendar year and what the contribution is looking like.

Speaker #4: Thanks, Jeff. So in a nutshell, just to confirm if I’m repeating, we are guiding that the second half 2026 contribution from Alinta in terms of net profit to the Sembcorp group will be $100 million.

Wong Kim Yin: Thanks, Jeff. So in a nutshell, just repeating, at the risk of repeating, we are guiding that the H2 2026 contribution from Alinta, in terms of net profit to the Sembcorp Group will be 100, right? So that is not a-

Speaker #4: Right, so that's not changing this guidance. Yeah, so usually the first half is slightly stronger, right? So the full year will be in the 220 to 230 type number if we were at 1st January today, guiding 2026.

Jeff Dimery: Changing

Wong Kim Yin: new guidance.

Jeff Dimery: Not changing.

Wong Kim Yin: Yeah. The first half is slightly stronger, right? The full year will be SGD 220 million, SGD 230 million type number if we were at 1 January today guiding 2026. Yeah. Just to be clear, that's the number. In terms of the underlying fundamentals in Australia, we are optimistic, even though it is a merchant market, right? First, Alinta has a big retail portfolio that it is hedged, maybe not 15 years, 18 years like what we can get in Singapore, two, three years. But it is a retail portfolio that is also quite sticky. Yeah. The other part of it is that Alinta has got low-cost generation, right? That underpins its ability, its competitiveness in terms of keeping customers and in terms of locking in margins. Yeah. The other thing is that Alinta has a East and West Coast market.

Speaker #4: Yeah. So just to be clear, that's the number. In terms of the underlying fundamentals in Australia, we are optimistic, even though it is, you know, a merchant market.

Speaker #4: Right. And first, a linter has a big retail portfolio that is hedged—maybe not 15 years, 18 years like what we can get in Singapore; maybe 2 or 3 years—but it is a retail portfolio that is also quite sticky.

Speaker #4: Yeah, the other part of it is that a linter has got low-cost generation, right? So that underpins its ability—its competitiveness—in terms of keeping customers and in terms of locking in margins.

Speaker #4: Yeah. The other thing is that a linter has a east and west coast market. In the west coast they are dominant. Right. And they are also very strong in the gas market.

Wong Kim Yin: In the West Coast, they are dominant, right? They are also very strong in the gas market. Where the market is heading, demand is growing faster than all the planners have expected. That's the first thing. We all know that in a place like Australia, if you want to plant new plants, it will take time, right? Even in the past, supply had trouble catching up with demand. Now, with demand going up faster, the supply is actually under a lot of pressure. In terms of market outcome, that's good reason to be optimistic. The macro is there, demand versus supply. The micro in terms of the business, low cost generation, strong position, good management team. That's why we are quite comfortable that this is a recurring cashflow and recurring income portfolio that will really enhance the resilience of the Sembcorp portfolio.

Speaker #4: So then where the market is heading demand is growing faster than all the planners have expected. So that's the first thing. And we all know that in a place like Australia if you want to plant new plants it will take time.

Speaker #4: Right. So even in the past supply has trouble catching up with demand. Now with demand going up faster the supply will take you know it's actually under a lot of pressure.

Speaker #4: So in terms of market outcome that's good reason to be to be optimistic. Right. So the macro is there. Demand versus supply. The micro in terms of the business low cost generation strong position good management team and that's why you know we're quite comfortable that this is a recurring cash flow and recurring income portfolio that will really enhance the resilience of the Sembcorp portfolio.

Speaker #4: So that's that. I want to also add a little bit more to the earlier question on capital allocation between renewables gas and so on.

Wong Kim Yin: That's that. I want to also add a little bit more to the earlier question on capital allocation between renewables, gas, and so on. IUS is IUS. We laid out the plan, what we are doing. We are recycling capital. We are selling some of the municipal water and so on. We sold SembWaste. Then in the meantime, we are allocating capital to build recurring cash flows. We build factories and all that in Vietnam, where we have got good access to good locations and good land. We are building up the land bank. That part of it, there is allocation. Then in terms of gas, we spoke about that. Then renewables, I just want to add that really, we will continue to chase after the good margin projects and where we think we would have the opportunity in terms of geography is first India.

Speaker #4: Right. So of course IUS is IUS we already laid out the plan what we're doing. We're recycling capital we're selling some of the municipal water and so on.

Speaker #4: We sold some waste. Right. So then in the meantime we are allocating capital to build recurring cash flow so a little bit of factories and all that in Vietnam where we have got good access to good locations and good land.

Speaker #4: We're building up the land bank. So that part of it there's allocation. Then in terms of gas we spoke about that. Then renewables I just want to add that really we'll continue to chase after the good margin projects.

Speaker #4: And where we think we would have the opportunity in terms of geography is first India. Right. As I told you you know we have a good team.

Speaker #4: We have a good portfolio that is currently being developed but we will be chasing more. But we will be conscious about chasing the good margins.

Wong Kim Yin: As I told you, we have a good team. We have a good portfolio that is currently being developed, but we will be chasing more. But we will be conscious about chasing the good margins. But the other one is Australia. Because, again, the fundamentals I described to you just now, and to the extent Alinta is in a position to build a renewable portfolio to complement their existing fleet of gas as well as coal power plants in order to serve their customer better, to create optionality for their portfolio trading and optimization. Those are areas that we would invest in. That is where, just to add additional geographic dimension to the capital allocation question. Horng Han, is it?

Speaker #4: But the other one is Australia. Right. Because again the fundamentals I described to you just now and to the extent a linter is in the position to build renewable portfolio to complement the existing feed of gas as well as coal power plants in order to serve their customer better to create optionality for their portfolio trading and optimization.

Speaker #4: Those are things that those are areas that we would invest in. Right. So that's where the just to complete add an additional geographic dimension to the capital allocation question.

Speaker #2: Or joy first.

Speaker #3: Joy first second row. Yeah. Joy from HSBC. Thanks for taking my question. First on if we can go back to Stark spread I think Eugene you mentioned average Stark spread came down about $8.

Eugene Cheng: Joy.

Wong Kim Yin: Joy.

Eugene Cheng: Joy first.

Ling Xin Jin: Joy first, second row. Yeah.

Xin Jin: Joy first, second row. Yeah.

[Company Representative] (HSBC): Joy from HSBC. Thanks for taking my question. First, if we can go back to spot spread. I think, Eugene, you mentioned average spot spread came down about SGD 8. If I look at your pies, I think there is a fair chunk at Senoko has already been repriced. How much more downside do we have on your current spot spread? So that is the first question. Second, on dividend. You alluded to increasing dividend. Shall we take your H1 payout as your full year payout? Or should we look at the percentage of growth as an indication to a full year dividend number? Thank you.

Joy Wang: Joy from HSBC. Thanks for taking my question. First, if we can go back to spot spread. I think, Eugene, you mentioned average spot spread came down about SGD 8. If I look at your pies, I think there is a fair chunk at Senoko has already been repriced. How much more downside do we have on your current spot spread? So that is the first question. Second, on dividend. You alluded to increasing dividend. Shall we take your H1 payout as your full year payout? Or should we look at the percentage of growth as an indication to a full year dividend number? Thank you.

Speaker #3: If I look at your pies I think there's a fair chunk at Senoko has already been repriced. How much more downside do we have on that your current Stark spread?

Speaker #3: So that's the first question. Second on dividend. I mean you're alluded to increasing dividend. Shall we take your first half payout as your full year payout?

Speaker #3: Or should we look at the percentage of growth as a indication to full year dividend number? Thank you.

Speaker #4: Now you're drawing a reaction from me. I answer a second question first. He answered second first than I. If we're going to stop at 11 you can take this company private.

Wong Kim Yin: Now you are drawing a reaction from me. Answer the second question first.

Eugene Cheng: Yeah, he answered the second first then I.

Wong Kim Yin: If we are going to stop at 11, you can take this company private. No. H1 is 11. Last year's H1 was 9. Last year's full year was 25. I want to be very careful with my words, because I was given a specific mandate, what I can say, what I can't. First, we recognize that we lack our peer group, internationally as well as domestically. Domestically, if you look at it, the numbers roll off my tongue. ST Engineering payout ratio, 80 some percent. Keppel Ltd. payout ratio, almost 70%. The bank payout ratio, DBS is, we know what they are. Was it United Overseas Bank or? I think United Overseas Bank more than 100%. We lack our peer group.

Speaker #4: No. Right. First half is 11. Last year's first half was 9. Right. Last year's full year was 25. So the we are I want to be very careful with my words because I was given a specific mandate what I can say what I can't.

Speaker #4: But first we recognize that we lack our peer group. Internationally as well as domestically. So domestically if you look at it you know the numbers roll off my tongue.

Speaker #4: SD Engineering payout ratio 87%. Capo payout ratio almost 70%. The banks payout ratio DBS is you know we know what they are. Was it UOB or I think UOB more than 100%.

Speaker #4: So we lack our peer group. Peer group today any investor coming into Singapore will look at the stock exchange and they say where do I put my money.

Wong Kim Yin: Peer group, today any investor coming into Singapore will look at the stock exchange and they say, "Where do I put my money?" If Sembcorp is lagging the peer group by so much, of course, we are the first one to be sold if they have to pool their money. If we want to attract capital to come into our stock, we have to increase our payout ratios to at least be at par with our peer group. That is something that we recognize that we are lagging. Now you will see in the last few years our behavior, it has been a steady increase from 2023, 2024, 2025, and now 2026. The short answer to your question, no, it is a half year payout. If I was an investor, I would extrapolate the full year payout with also an increase in the H2.

Speaker #4: Right. So then if Sembcorp is lagging the peer group by so much of course we're the first one to be sold. If they have to pull their money.

Speaker #4: And if they have to if we want to attract capital to come into our stock we have to increase our payout ratio to at least be at par with our peer group.

Speaker #4: Right. So that is something that we recognize. Right. That we are lagging. So now you will see in the last few years our behavior you know it has been a steady increase from 24, 23, 24, 25 and now 26.

Speaker #4: Right. So the short answer to your question no it is a half year payout. Right. And you can if I was an investor I would extrapolate the full year payout with also an increase in the second half.

Speaker #4: Right. So because that is in the backdrop of what I told you what we recognize that we're re lagging our peer group. Right. And that we think that's one aspect to it.

Wong Kim Yin: Because that is in the backdrop of what I told you, what we recognize that we are lagging our peer group, and that we think that's one aspect to it. The other aspect is that we feel that we are actually very comfortable doing this in terms of that increasing the payout ratio, which we are very committed to. Why? Because the underlying business and the cash flow is very strong. Eugene Cheng will be able to show you scenarios whereby even if net profit doesn't perform as we expect it to grow, we will still be delevering quickly back into the 3 times, 4 times debt to EBITDA range in 3, 4 years' time. We are very comfortable with that. Because of that, then the cash flow, other than investing activities returning it to shareholders through dividend is also an important signal to the investor community.

Speaker #4: The other aspect is that we feel that we are actually very comfortable doing this. In terms of that increasing the payout ratio which we are very committed to.

Speaker #4: Why? Because to catch underlying business and the cash flow is very strong. And Eugene will be able to show you scenarios whereby you know even if we net profit doesn't perform as we expect it to grow we will still be delivering quickly.

Speaker #4: Back into the three times four times debt to EBITDA range in three, four years time. So we are very comfortable with that. And because of that then the cash flow other than investing activities returning it to shareholders through dividend is also an important signal.

Speaker #4: To the investor community. So short answer it's only for half year 11 cents and we recognize we are lagging peer group. We're committed to increasing our payout ratio.

Wong Kim Yin: So short answer, it's only for half year, 11 cents. We recognize we are a lagging peer group. We are committed to increasing our payout ratio. The only thing I fall short of saying is to tell you what is the target. Just to clarify, I guess what I'm trying to say is 11 cents is about 53% payout on the underlying profit for H1. Can we extrapolate that ratio? I think for this particular year, on a non pro forma basis, not unreasonable. Okay. I think historically how you have seen we have done it, if it's a year of dividend increase, we like to think of it of increasing both H1 and H2 also. Yeah. We also distribute our targeted increase for the full year accordingly. I don't remember the numbers, Yu Jin. In 2025, H1 was 9, right? 9.

Speaker #4: The only thing I fall short of saying is to tell you what is the target. But.

Speaker #3: I guess yeah. Just to clarify I guess what I'm trying to say is 11 cents is about 53% payout on the underlying profit for first half.

Speaker #3: Can we extrapolate that ratio?

Speaker #4: I think for this particular year on a non pro forma basis not unreasonable. Okay. And I think historically how you have seen we have done it it's if it's a year of dividend increase we like to think of it of increasing both first half and second half also.

Speaker #4: And we also distribute our targeted increase for the full year you know accordingly. Right. I don't remember the numbers. Eugene in 2020 2025 first half was 9.

Speaker #4: Right. 9. That's right. 2024 first half was what? First half was 6. 6. Yeah. Okay. Then 2025 second half was what? Second half was 16.

Eugene Cheng: 9. That is right.

Wong Kim Yin: That is right. 2024 H1 was what? H1 was 6. 6. Yeah. Okay. 2025 H2 was what? H2 was 16. Yes. That is right. 2024 was 13, I think. 13. Okay, so sorry, I do not have a slide to show you that, but I am trying to show you there is a track record you can go back. There is a certain pattern that we do this. Yeah. We tell people we are committed to steadily increasing it as opposed to increasing it one round. So somehow many people feel that steadily is always better. I happen to be a little bit on the other side of the camp, but it does not matter. Because more importantly, we are comfortable with sustaining it even while we delever. Yeah. That is very important. Sustaining an increase. When I talk about sustain, I am talking about sustaining an increase.

Wong Kim Yin: 2024 H1 was what?

Eugene Cheng: H1 was 6.

Wong Kim Yin: 6.

Eugene Cheng: Yeah.

Wong Kim Yin: Okay. 2025 H2 was what?

Speaker #4: Yes. That's right. Then 2024 was 13. 13. Okay. So sorry I don't have the slides to show you that but I'm trying to show you that there's a track record you can go back.

Eugene Cheng: H2 was 16. Yes. That is right.

Wong Kim Yin: 2024

Eugene Cheng: was 13, I think.

Wong Kim Yin: 13. Okay, so sorry, I do not have a slide to show you that, but I am trying to show you there is a track record you can go back. There is a certain pattern that we do this.

Speaker #4: There is a certain pattern that we do this. Yeah. So and we tell people we are committed to steadily increasing it as opposed to increasing it one round.

Eugene Cheng: Yeah.

Wong Kim Yin: We tell people we are committed to steadily increasing it as opposed to increasing it one round. So somehow many people feel that steadily is always better. I happen to be a little bit on the other side of the camp, but it does not matter. Because more importantly, we are comfortable with sustaining it even while we delever.

Speaker #4: Right. So somehow many people feel that steady is always better. I happen to be a little bit on the other side of the cam but doesn't matter.

Speaker #4: So because we're re comfortable with the more importantly we're comfortable with sustaining it even while we deliver. So that's very important. Sustaining and increase when I talk about sustaining I'm talking about sustaining and increase.

Eugene Cheng: Yeah.

Wong Kim Yin: That is very important. Sustaining an increase. When I talk about sustain, I am talking about sustaining an increase.

Speaker #4: I'm not talking about sustaining at this level. Sustaining and increase while we deliver. Right. Because the cash flow supports that. So I don't want to belabor that point.

Wong Kim Yin: I am not talking about sustaining at this level. Sustaining an increase while we delever. Because the cash flow supports that. I do not want to belabor that point. Let us focus on the season today. It is SGD 0.11. It is SGD 0.02 more than what it used to be. Year-end, we expect to be able to sustain the growth. Thank you, Joy. You had a second question. Spark spread. Oh, spark spread. Sembcorp we left about 20%, right? Of course, it is 20% for recontracting. A lot of it has been negotiated already. Of course, we do not expect this to be as high as historical. But we are quite happy that the spark spreads that we are landing at is better than at the start of the year. Remember, we were struggling around 30, 35 early on, but certainly, for this it will be better.

Speaker #4: Focus let's focus on the season today. It's 11 cents. It's 2 cents more than what it used to be. And then year end we expect to be able to sustain the growth.

Speaker #4: Thank you. Joy.

Speaker #2: You had a second question. Oh, spark spread. So now Sernoco we left about 20%. Right. Of course it's 20% for re-contracting a lot of it has been negotiated already.

Joy Wang: Spark spread.

Eugene Cheng: Oh, spark spread. Sembcorp we left about 20%, right? Of course, it is 20% for recontracting. A lot of it has been negotiated already. Of course, we do not expect this to be as high as historical. But we are quite happy that the spark spreads that we are landing at is better than at the start of the year. Remember, we were struggling around 30, 35 early on, but certainly, for this it will be better.

Speaker #2: Now of course we don't expect this to be as high as historical. But we're quite happy that the spark spreads that we are landing at is better.

Speaker #2: It's better than at the start of the year. Remember we were struggling around 30, 35 early on. But certainly for this it will be better.

Speaker #4: And I think in the past we have told our stakeholders that you know our portfolio wise in terms of contracted portfolio for Sembcorp we are sort of in the more than $50 range.

Wong Kim Yin: I think in the past we have told our stakeholders that our portfolio wise, in terms of contracted portfolio for Sembcorp, we are sort of in the more than $50 range. Right. So with the market, the spark spread being closer to between $60 to $90, it also present opportunity to go and lock in better quality, better price, better margin contracts, albeit for the short term. But the longer term, if it is sustained, then again, there may be an opportunity then to locking in long-term contracts. So, the last month or two gave us a lot of confidence that things are turning. Thank you. Horng Han, is it? Yeah.

Speaker #4: Right. So now with the market the spot spark spread being closer to the between 60 to $90 it also present an opportunity to go and lock in better quality better price better margin contracts.

Speaker #4: All be it for the short term. Right. But the longer term if this sustained then again then maybe the opportunity then to locking in long term contracts.

Speaker #4: So the last month or two gave us a lot of confidence that things are turning. Hong Han is it?

Speaker #3: Yeah.

Joy Wang: Thank you.

Wong Kim Yin: Horng Han, is it?

Xin Jin: Yeah.

Speaker #5: Hi. Good afternoon. Hong Han from CRSA. I just want to ask one question with regards to the importation of renewables from Malaysia to Singapore.

Horng Han Low: Hi, good afternoon. Horng Han from CLSA. I just want to ask one question with regards to the importation of renewables from Malaysia to Singapore. Is there a PPA contract for this? If there is, what sort of return should investors expect? To conclude this would be in terms of cannibalization of existing demand, should we see more of this renewables importation coming to Singapore? Would this partially, to some extent, cannibalize the existing demand coming from gas fired power plant? Thank you.

Horng Han: Hi, good afternoon. Horng Han from CLSA. I just want to ask one question with regards to the importation of renewables from Malaysia to Singapore. Is there a PPA contract for this? If there is, what sort of return should investors expect? To conclude this would be in terms of cannibalization of existing demand, should we see more of this renewables importation coming to Singapore? Would this partially, to some extent, cannibalize the existing demand coming from gas fired power plant? Thank you.

Speaker #5: Is there a PPA contract for this? And if there is what sort of returns should investors expect? And to conclude this would be in terms of you know cannibalization of existing demand.

Speaker #5: Should we see more of this renewables importation coming to Singapore? Will this partially to some extent cannibalize the existing demand coming from gas fire power plant?

Speaker #5: Thank you.

Speaker #4: It depends on price. So when it lands what is the price? Right. So at the end of the day customers are selective based on price.

Wong Kim Yin: Depends on price. When it lands, what is the price? At the end of the day, customers are selective based on price. The import today, you have to factor in the generation cost as well as the transmission cost because transmission, undersea cable, even if you bring it from Peninsular Malaysia, there is still a short distance of undersea cable and then in between the governments, they need to negotiate what is the toll. You factor all that in. Today, if you ask me, I do not think it is as competitive as the domestic generation. I dare say that. Today, basically, if you add all that in, of what upstream generation wants, what the transmission needs, and what the government wants to factor in on top of it as a margin, it is still much cheaper to generate onshore. Let us put it that way.

Speaker #4: So the import today the it had to factor in the generation cost as well as the transmission cost because transmission undersea cable even if you bring it from Peninsula Malaysia there's still a short distance of undersea cable.

Speaker #4: And then the in between the government's there is also they need to negotiate what is the toll. Right. So you factor all that in today if you ask me I don't think it is as competitive as the domestic generation.

Speaker #4: I dare say that. You know today based if you add all that in of what upstream generation wants what the transmission needs and what the government wants to factor in on top of it as a margin it's still much cheaper to generate on shore.

Speaker #4: Let's put it that way. So he will come right. But at a point where there's still a distance let's put it this way there's still a distance between what could be attractive to customers in Singapore from what the what people are asking for for both generation and transmission.

Wong Kim Yin: It will come but at a point where there is still a distance. Let us put it this way, there is still a distance between what could be attractive to customers in Singapore from what people are asking for, both generation and transmission. Chiap Khiong is here. You want to touch on that? You covered it. Whether it is going to cannibalize, definitely not in the near term. I cannot see it. Even if it lands, it is going to be expensive. It would take away maybe the people who are very sensitive to green. If somebody is willing to pay SGD 300 per megawatt hour, SGD 280 per megawatt hour for green power, then okay, that customer might have to go there. But other than that, no one is going to pay that kind of money, not in Singapore.

Speaker #4: I you know Chep Kiong is here. You want to touch on that? You covered it. So whether it's going to cannibalize definitely not in the near term.

Speaker #4: Can't see it. Even if it lands it's going to be expensive. Right. So it would take away maybe the people who are very sensitive to green right.

Speaker #4: So if somebody willing to pay $300 per megawatt hour $280 per megawatt hour for green power then okay that customer might have to go there.

Speaker #4: But other than that you know no one is going to pay that kind of money for not in Singapore.

Speaker #5: So can I try to understand from a distributor perspective. Right. Because you operate power plants at the same time you are also importing and distributing renewables energy into Singapore.

Horng Han Low: Sure. Can I try to understand from a distributor perspective, because you operate power plants at the same time, you are also importing and distributing renewables energy into Singapore. Should we think that from a risk-reward perspective, distribution of electricity or the selling of electricity coming to Singapore would perhaps, you will demand a slightly lower return compared to your power generation business?

Horng Han: Sure. Can I try to understand from a distributor perspective, because you operate power plants at the same time, you are also importing and distributing renewables energy into Singapore. Should we think that from a risk-reward perspective, distribution of electricity or the selling of electricity coming to Singapore would perhaps, you will demand a slightly lower return compared to your power generation business?

Speaker #5: Should we think that from a risk reward perspective distribution of electricity or the selling of electricity coming to Singapore would perhaps you will demand a slightly lower return compared to your power generation business.

Speaker #4: No. It's the same customer that I'm serving. Right. So I'm the same customer. I can choose to give him power from my CCB4. I can choose to give him power from my SACRA.

Wong Kim Yin: No. It is the same customer that I am serving.

Horng Han Low: Oh, okay.

Horng Han: Oh, okay.

Wong Kim Yin: So, Horng Han, I have the same customer. I can choose to give him power from my CCP4. I can choose to give him power from my Sakra. I can choose to direct that power source to Sembcorp. I can go and buy from Seraya if they sell me cheap for whatever reason, to serve my customer. I can also then bring it in from Malaysia or Indonesia or for that matter, Vietnam, to give to my customer. You can see that it is actually a very simple equation. This is what my customer is willing to pay. Then what is the source that I would direct to serve my customer so that I maximize my margin? If, let us say in Singapore, I am generating my power from my CCP4 at SGD 50 per megawatt hour. My customer is willing to pay SGD 150. My import is going to cost me SGD 120.

Speaker #4: I can choose to direct that power source to Sernoco. Right. I can go and buy from Saraya if they sell me cheap for whatever reason.

Speaker #4: To serve my customer. I can also then bring it in from Malaysia or Indonesia or for that matter Vietnam to give to my customer.

Speaker #4: So you can see that it's actually a very simple equation. This is what my customer willing to pay. Right. Then what is the source that I would direct to serve my customer so that I maximize my margin?

Wong Kim Yin: You can see that it is actually a very simple equation. This is what my customer is willing to pay. Then what is the source that I would direct to serve my customer so that I maximize my margin? If, let us say in Singapore, I am generating my power from my CCP4 at SGD 50 per megawatt hour. My customer is willing to pay SGD 150. My import is going to cost me SGD 120.

Speaker #4: So if let's say in Singapore I'm generating my power from my CCB4 at $50 per megawatt hour my customer willing to pay $150. My import is going to cost me $120.

Speaker #4: Why would I take the import to serve my customer? Right. I would just run my power plant and then collect the $100 margin. So it's as simple as that.

Wong Kim Yin: Why would I take the import to sell my customer? I would just run my power plant and then collect the SGD 100 margin. It is as simple as that. Then it is the same dynamics. I am going up to the upstream and telling the upstream generator, it could be in Sarawak, it could be in Malaysia, it could be in Batam, and I am saying that, "Hey, look. I can sign a contract with you, but it has to be of this price that is worth my while." It is actually very commercial. Coming back, I can see the underlying question is whether or not this market dynamics moving forward will be materially disrupted by incoming new sources from the neighboring countries. My answer is that not in the timeframe that we are planning. Let us say if I am planning 2028, 2030, I cannot see that happening at all.

Speaker #4: So then it's the same dynamics I'm going up to the upstream and telling the upstream generator it could be in Sarawak it could be in Malaysia it could be in Batam and I'm saying that hey look you know I can sign a contract with you but it has to be of this price that's worth my while.

Speaker #4: So it's actually very commercial. Right. So coming back if you I can see the underlying question is whether or not this market dynamics moving forward will be materially disrupted by incoming new sources from the neighboring countries and my answer is that not in the time frame that you know we are planning.

Wong Kim Yin: It is actually very commercial. Coming back, I can see the underlying question is whether or not this market dynamics moving forward will be materially disrupted by incoming new sources from the neighboring countries. My answer is that not in the timeframe that we are planning. Let us say if I am planning 2028, 2030, I cannot see that happening at all. Even if it lands, it is going to be in the SGD 300 range or SGD 280, SGD 270 range. That range is just not competitive based on what we can deliver at that time.

Speaker #4: You know let's say if I'm planning 2028 2030 I can't see that happening at all. Even if it lands it's going to be in the $300 range or $280 $270 range and that range is just not competitive based on what we can deliver at that time.

Wong Kim Yin: Even if it lands, it is going to be in the SGD 300 range or SGD 280, SGD 270 range. That range is just not competitive based on what we can deliver at that time.

Speaker #5: Can I just circle back to the discussion towards you set prices. Right. I mean if you look at past cycles you set tends to correlate very much to supply demand dynamics.

Horng Han Low: Can I just circle back to the discussion towards USEP prices? If you look at past cycles, USEP tends to correlate very much to supply-demand dynamics. It basically reflects supply demand. I think this relationship is no longer so straightforward this year on the back of Iran war. I think if you look in terms of the price trend, it's basically rebound very strongly on the back of the geopolitical tensions. So the question I have is that, spot spread has gone up significantly higher. As you mentioned, SGD 60 to SGD 90 range is very attractive. At the same time, we do have a lot of supply coming through. Can we try to get some insights with regards to the discussion you have with your customers, those who want to sign a 15-year contract?

Horng Han: Can I just circle back to the discussion towards USEP prices? If you look at past cycles, USEP tends to correlate very much to supply-demand dynamics. It basically reflects supply demand. I think this relationship is no longer so straightforward this year on the back of Iran war. I think if you look in terms of the price trend, it's basically rebound very strongly on the back of the geopolitical tensions. So the question I have is that, spot spread has gone up significantly higher. As you mentioned, SGD 60 to SGD 90 range is very attractive. At the same time, we do have a lot of supply coming through.

Speaker #5: It basically reflects supply demand. But I think this relationship is no longer so straightforward this year on the back of Iran war and I think if you look in terms of the price trend it's basically rebound very strongly on the back of the geopolitical tensions.

Speaker #5: So the question I have is that you know sports spark spread has gone up significantly higher as you mentioned 60 to $90 range is very attractive but at the same time we do have a lot of supply coming through.

Speaker #5: So can we try to get some insights with regards to the discussion you have with your customers those who want to sign a 15 year contract are they looking backwards how spark spread price trend has been or are they looking more forward given that you know that spot prices have gone up a lot more or there could be trying to renegotiate and delay some of the signing of contracts there.

Horng Han: Can we try to get some insights with regards to the discussion you have with your customers, those who want to sign a 15-year contract? Are they looking backwards how spot spread price trend has been, or are they looking more forward given that spot prices have gone up a lot more? Or they could be trying to renegotiate and delay some of the signing of contracts there. Thank you.

Horng Han Low: Are they looking backwards how spot spread price trend has been, or are they looking more forward given that spot prices have gone up a lot more? Or they could be trying to renegotiate and delay some of the signing of contracts there. Thank you.

Speaker #4: How the customer thinks you can probably have a better guess than many people you know but I will ask Chep Kiong to address the customer part but I want to first mention that this is not new to us.

Wong Kim Yin: How the customer thinks, you can probably have a better guess than many people. I will ask Chiap Khiong to address the customer part. I want to first mention that this is not new to us. This volatility in the market is not new to us. I do not know whether you were covering this company before I came here in 2019, 2020. In that period, we had a buff. There was too much of capacity. Demand was not what planners expect. Then margins were very low. So customers are thinking about the past and looking to the future. We ourselves are also doing the same. That is why we keep on emphasizing that our strategy is to make sure that we are not overly exposed, and we insulate ourselves by signing contracts.

Speaker #4: This volatility in the market is not new to us. Right. So if you I don't know whether you were covering this company before I came here in 2019 2020.

Speaker #4: Right. In that period we had a bad bath. There was too much of capacity demand was not what a planner's expect. Right. So then margins were very low.

Speaker #4: So customers are thinking about the past and looking to the future. We ourselves are also doing the same. And that's why we keep on emphasizing that you know our strategy is to make sure that we are not overly exposed and we insulate ourselves by signing contracts.

Speaker #4: Right. So if we didn't sign the contracts that we did if we didn't have the contract portfolio that we did today I might suggest that our based on the 30 $40 spark spread Singapore instead of delivering 6 700 million will be delivering 400 you know.

Wong Kim Yin: If we did not sign the contracts that we did, if we did not have the contract portfolio that we did, today, I might suggest that based on the SGD 30, SGD 40 spot spread, Singapore, instead of delivering 600, 700 million, will be delivering 400. So we would be a 500-million company instead of a billion-dollar company net profit-wise. So we somewhat insulated, or rather somewhat is the wrong word. I think we have insulated ourselves very well and in terms of thinking forward. When we commission CCP4, and that is why just now in Shuki's question, I am saying that we are building the supply. We are lining up the supply in order to serve my customer portfolio. So the mentality is that, look, I have got these customers, I have got this contract, I have got this margin. What is the plan that I need to go in?

Speaker #4: So we would be a 500 million company instead of a billion dollar company net profit wise. So we somewhat insulated or rather we somewhat is the wrong word.

Speaker #4: I think we are insulated ourselves very well and in terms of thinking forward and when we commission CCB4 and that's why just now in Sue Key's question you know I'm saying that we are building the supply.

Wong Kim Yin: I think we have insulated ourselves very well and in terms of thinking forward. When we commission CCP4, and that is why just now in Shuki's question, I am saying that we are building the supply. We are lining up the supply in order to serve my customer portfolio. So the mentality is that, look, I have got these customers, I have got this contract, I have got this margin. What is the plan that I need to go in?

Speaker #4: We are lining up the supply in order to serve my customer portfolio. So the mentality is that look I have these customers. I got these contracts.

Speaker #4: I got this margin. What is the plan that I need to go in. Now I am talking about this because you have to think about with someone who doesn't have my competitor who doesn't have this contract portfolio what will they be doing?

Wong Kim Yin: Now, I am talking about this because we have to think about with someone who does not have my competitor, who does not have this contract portfolio, what would they be doing? They will be planting, and then they will be trying to sign up the contracts. Some of them are copying our strategy to sign contracts that will and they also, but the bulk of that generation will be a little bit like Senoko, selling into the pool. When there is more supply than the demand being expected coming through, you are right. You could expect that prices will start to ease, and it might go back to the days of 2017, 2018. But again, I am saying that we are first insulating ourselves. Second, in planting new plants, we have factored that into our considerations.

Speaker #4: They will be planting and then they'll be trying to sign up the contracts. Some of them are copying our strategy to sign contracts that will you know and they also but the bulk of their generation will be a little bit like Sernoco.

Speaker #4: Selling into the pool. So when there is more supply then the demand being expected coming through you are right. You know you could expect that prices will start to ease and it might go back to the days of the 2017 2018.

Speaker #4: Right. But again I'm saying that we are first insulating ourselves. Second in planting new plants you know we have factored that into our considerations.

Speaker #4: And then in terms of engaging our customers we are also going to the high quality customers who are wanting to have stability rather than having to ride the cycles.

Wong Kim Yin: In terms of engaging our customers, we are also going to the high-quality customers who are wanting to have stability rather than having to ride the cycles. Someone like a Micron, for instance, that is why we keep emphasizing the relationship with them and the direct agreement that we just talked to you about. These are people who have a very long-term investment horizon. Even when things were bad, they were still planting. If you look at the Micron financials and their latest release, these guys, the business is just booming because of the high bandwidth memory and all those things that are going into their planning. The high-quality customers are more likely to want to have stability, and this is where we have a sweet spot. Because again, we have a low-cost generation efficient. We have low-cost gas.

Speaker #4: Right. So someone like a Micron for instance that's why we keep emphasizing the relationship with them and the direct agreement that we just talked to you about.

Speaker #4: The these are people who have a very long term investment horizon. Right. So even when things were bad they were still planting. Now if you look at the Micron financials and their latest release these guys you know the business is just booming.

Speaker #4: Right. Because of the high bandwidth memory and all those things that are going into their planning. So the high quality customers are more likely to want to have stability and this is where we have a sweet spot.

Speaker #4: Right. Because again we have a low cost generation. Efficient. We have low cost gas well low cost gas maybe competitively priced gas. Right. We have LNG we got PNG and then we got the power plants and then now we are increasingly also extending the contract strategy into Sernoco.

Wong Kim Yin: Well, low-cost gas, maybe competitively priced gas. We have LNG, we have PNG, and then we have the power plants. Now we are increasingly also extending the contract strategy into Senoko. Because the Sembcorp portfolio is largely contracted. Now we are extending that contract strategy to make sure that Senoko will be less exposed. Never mind that Senoko will really have our payback. Whatever that we paid to acquire it, we already got it. But extending that contract strategy, if we are successful, and in this case, Senoko and Micron moving forward, then it will again, what we did with Sembcorp portfolio, we are hopeful that we can replicate that with the Senoko portfolio such that it will then elevate itself from a very volatile earnings profile into there is a base load that we can count on to contract.

Speaker #4: Right. Because the Sembcorp portfolio is largely contracted. So now we are extending that contract strategy to make sure that Sernoco will be less exposed.

Speaker #4: Never mind that Sernoco we already have our payback. Right. Whatever that we pay to acquire it we already got it. So but that extending that contract strategy if we are successful and in this case Sernoco and Micron moving forward then it will again what we did with Sembcorp portfolio we are hopeful that we can replicate that with the Sernoco portfolio such that it will then elevate itself from a very volatile earnings profile into there is a base load that you can count on to contract.

Speaker #4: So again we move away from so Sernoco hopefully from a 500 million year dropping to 100 million next year and then going to 600 million the following year we will try to get it to then stabilize at 4 500.

Wong Kim Yin: We move away from Senoko, hopefully from SGD 500 million a year, dropping to SGD 100 million next year, and then going to SGD 600 million the following year. We will try to get it to then stabilize at SGD 400 or SGD 500 million. That is the strategy. It is not quite there yet, but I alluded to it just now in my delivery that Senoko, with our help, has signed a direct connection agreement with Micron. It is significant because with that direct agreement there is then Micron and Senoko has a cost advantage. Because now you can connect directly without going through the grid. I am saying all these things because I think, Horng Han, your question is saying that, "Look, is this market going to hold up?" I am trying to say that I do not know.

Speaker #4: Right. So that's the strategy. It's not quite there yet but I alluded to it just now in my delivery that Sernoco with our help has signed a direct connection agreement with Micron.

Speaker #4: It's significant because with that direct agreement there is then Micron and Sernoco has a cost advantage. Because now you can connect directly without going through the grid.

Speaker #4: Yeah. So because I'm saying all these things because I think Hong Han you are asking your question is saying that look is this market going to hold out.

Speaker #4: Right. So then I'm trying to say that I don't know. Right. But I spend the time then talking about what we will do to navigate this market whichever way it's going to go.

Wong Kim Yin: But I spend the time then talking about what we will do to navigate this market whichever way it is going to go. If it goes high, great. We are there. We will capture it. If it is going to have an oversupply situation with all the plants coming online, our strategy is actually to make sure that we will hold up not just the Sembcorp portfolio, we are now extending it to the Senoko portfolio. We also just told you that we have just achieved a very good step, a next step in that strategy with the Micron direct connection agreement. I would like Cheuk to help me out talk about, because he deals with the customers directly, so it is better hear from him.

Speaker #4: If it goes high great we are there we'll capture it. If it's going to have an oversupply situation all the plants coming online our strategy is actually to make sure that we will hold out not just the Sembcorp portfolio we are now extending it to the Sernoco portfolio and we are also just told you that you know we have just achieved a very good step a next step in that strategy with the Micron direct connection agreement.

Speaker #4: So I would like Chuck to help me out and talk about because he deals with the customers directly so it's better to hear from him.

Speaker #2: Yeah. Thanks Hong Han. I think the customers part is quite interesting. If you look at Singapore additional growth for demand which sector. Okay. Comes namely from semicon and DCs.

Koh Chiap Khiong: Yeah. Thanks, Horng Han. I think the customers part is quite interesting. If you look at Singapore additional growth for demand, which sector? It comes namely from semicon and DCs. We are quite in a very interesting position for capturing the market in these two segments. Why? Semicons are all growing more in the north side, the northeast, and Senoko actually stands in a very interesting position. Micron, just for your info, they take about 10% of the whole Singapore power. It is our strategic customer. So our linkage to Micron as they grow, like what Kim Yin say, they are not looking at up and down. They are looking at stability of electrons. Whether there is electrons, whether the price is stable, instead of when they initially, before they contract with us, Ukraine war came, the prices was crazy high.

Speaker #2: And we are quite in a very interesting position for capturing the market in these two segments. Why? Semicons are all growing more in the north side.

Speaker #2: The north east. And Sernoco actually stands in a very very interesting position. Micron just for info they take about 10 percent of the whole Singapore power.

Speaker #2: It's our strategic customer. So grow like what Kim Min say they are not looking at up and down they are looking at stability of electrons.

Speaker #2: Whether there's electrons whether the price is stable instead of when they initially before they contract with us Ukraine war came the prices was crazy high.

Speaker #2: So in terms of a 10 percent needs of the power requirements they will never be able to take this kind of shots. So they are very happy to look at long term agreements and they are happy to look at a partnership with us.

Koh Chiap Khiong: So in terms of the 10% needs of the power requirements, they would never be able to take this kind of shocks. So they are very happy to look at long-term agreements, and they are happy to look at a partnership with us. So semicon, we are in very good position to actually look at the increase in growth. DCs, if you look at all the requirements in DCs, getting a license, they need a lot of green elements. We are also there. So these two segments where the big demand is, we are very close to the customer. If you look at demand supply, we have new machines. The way that we are thinking about it, the baseload we will be contracting to with all these new growth, new customers.

Speaker #2: So semicons we are in very very good position to actually look at the increasing growth. DCs if you look at all the requirements in DCs getting a license they need a lot of green elements.

Speaker #2: And we are also there. So these two segment where the big demand is we are very very close to the customer. And if you look at demand supply we have new machines the way that we are thinking about it the base load will be contracting to with all these new customers.

Speaker #2: New growth new customers. Then Sernoco and ourselves we got some old machines that we can actually then flex it if the wholesale price goes high we can actually flex it.

Koh Chiap Khiong: Sembcorp and ourselves, we have got some old machines we can actually then flex it if the wholesale price goes high, we can actually flex it. So I think we are in a very good, comfortable position where overall demand and supply may be a bit mismatched, but where the customer is, where the long-term agreements are, we are quite in a good niche to cover them. Then we have the flex of opportunistic kind of a play as well. So why customer like us? Because we have got good machines. We also can access to gas. We have a good portfolio of green and new stuff like biomethane. I think all this adds elements to why we believe that customers will come to us. We have to work very hard to also court them, but I think naturally there is a fit between us.

Speaker #2: So I think we are in a very good comfortable position where overall demand and supply may be a bit mismatched but where the customer is where the long term agreements are we are quite in a good niche to cover them.

Speaker #2: And then we have the flex of opportunistic kind of a play as well. So why customer like us because we got good machines we also can access to gas we have a good portfolio of green.

Speaker #2: And new stuff like biomethane and also I think all this adds elements to why we believe that customers will come to us. And we have to work very hard to also caught them but I think naturally there's a fit between us.

Speaker #4: Just to add a little bit the two aspects. One is that this we are customer selecting us. We are also selecting customers. Right. So we are going to customers who you can see from our past behavior we are able to secure some of these people who are prepared to sign very long term.

Wong Kim Yin: Just to add a little bit, the two aspects. One is that we are customers selecting us. We are also selecting customers, right? We are going to customers who, as you can see from our past behavior, we are able to secure some of these people who are prepared to sign very long-term, right? And we are selecting customers that are having that priority of stability versus short-term gains. You go and analyze the value chain, let's say for a data center seller. The type of margins they are going to get in operating a data center is much higher than the margins that one can get selling power, right? But we are not getting into their business. But the point really is that if power supply is disrupted, that very high margin that they can corner with their customers will be affected. So they do not want that, right?

Speaker #4: Right. And we are selecting customers that are having that priority of stability versus short term gains. Right. So if you go and analyze the value chain let's say for a data center fellow the type of margins they're going to get in operating a data center is much much much higher than the margins that one can get selling power.

Speaker #4: Right. But we're not getting into their business. But what the point really is that if power supply is disrupted that very very high margin that they can corner with their customers will be affected.

Speaker #4: So they don't want that. Right. So they have bigger fish to fry than try to negotiate with me for the last half a cent of power price.

Wong Kim Yin: They have bigger fish to fry than try to negotiate with me for the last half a cent of power price. You can see where. So what they rather have is go to someone who can, in that market, give them what they want, but be able to stand behind it reliably. So to Chiap Khiong's point, we have all these sources, right? I have got older plants. I have got newer plants. On a bad day when my plant is down, my old plant can be cranked up to serve them. On a good day when they need some green, I am the biggest green player in town. And because of that, then the second aspect what I want to talk about is that then this import they are talking about.

Speaker #4: You can see so what they rather have is go to someone who can in that market give them what they want but be able to stand behind it reliably.

Speaker #4: So to Chuck Yong's point we have all these sources. Right. I've got older plants I've got newer plants on a bad day when my plant is down my old plant can be cranked up to serve them.

Speaker #4: On a good day when they need some green I am the biggest green player in town. And because of that then the second aspect what I want to talk about is that then this import they're talking about.

Speaker #4: If I am saying that oh look you know it's still too expensive relative to my domestic generation why am I you know talking to all these people.

Wong Kim Yin: If I am saying that, "Oh, look, it is still too expensive relative to my domestic generation," why am I talking to all these people? Eventually it will come. Eventually, there will be enough customers who pay for it. We are positioning ourselves to a full court press. So when that comes, we are not left out. Batam, people come and talk to us. Johor, people come and talk to us, right? And then Sarawak, Vietnam, all the sources are there. And when it comes, we are the ones with the customer. As long as we have the customer, I sign a contract with whoever is generating power upstream, it will underpin the financing for the upstream investment. Right? And that contract has to be long. How many people have the ability to sign a long-term contract that will underpin upstream investment in Singapore?

Speaker #4: Eventually it will come. Eventually there will be enough customers who pay for it. We are positioning ourselves to a full court press. So when that comes we are not left out.

Speaker #4: So Batam people come and talk to us. Johor people come and talk to us. Right. And then Sarawak Vietnam all the sources are there.

Speaker #4: And when it comes we are the ones with the customer. As long as we have the customer I sign a contract with whoever is generating power upstream it will underpin the financing for the upstream investments.

Speaker #4: Right. And that contract has to be long. How many people have the ability to sign a long term contract that will underpin the upstream investment.

Speaker #4: In Singapore. So going back to what Chuck Yong was saying so there's that customer what they want and how we select the customer there's also why are we doing some of these things is actually to position so that then when it comes government is talking about nuclear.

Wong Kim Yin: Going back to what Chiap Khiong was saying. So there is the customer, what they want, and how we select the customer. There is also why are we doing some of these things. It is actually to position so that then when it comes, right? Government is talking about nuclear. Maybe I should not say that, but people are talking about nuclear. And if nuclear comes, we are also positioning ourselves to protect our market share and to find the best way to serve our customers if it does come. So we have all those. So part of the decarbonization solution that we spoke about, right? We are trying to, by investing in option type cost, maintain that possibility that if it ever comes, we are in the position to not be left out, if not be in the lead.

Speaker #4: Maybe I shouldn't say that but people are talking about nuclear. And if nuclear comes you know we are also positioning ourselves you know to protect our market share and to find the best way to serve our customers.

Speaker #4: If it does come. So we have all those so part of that decarbonization solution that we spoke about. Right. We are trying to at the by investing in the option type cost maintain that possibility that if it ever comes we are in the position to not be left out.

Wong Kim Yin: We are trying to, by investing in option type cost, maintain that possibility that if it ever comes, we are in the position to not be left out, if not be in the lead. But today, in the planning horizon that we talk about when it comes to earnings forecast and so on, I wouldn't worry about imports. I wouldn't worry about nuclear. I wouldn't worry about hydrogen. Renewables, yes. Gas, yes, for Singapore. And then for places like India and Australia, coal remains a very big factor.

Speaker #4: If not be in the lead. So but today in the planning horizon that we talk about when it comes to earnings forecast and so on you know I wouldn't worry about imports.

Wong Kim Yin: But today, in the planning horizon that we talk about when it comes to earnings forecast and so on, I wouldn't worry about imports. I wouldn't worry about nuclear. I wouldn't worry about hydrogen. Renewables, yes. Gas, yes, for Singapore. And then for places like India and Australia, coal remains a very big factor.

Speaker #4: I wouldn't worry about nuclear. I wouldn't worry about hydrogen. Right. Renewables yes. Gas yes for Singapore. Then for places like India and Australia coal remains a very big factor.

Speaker #1: Thank you very much.

Koh Chiap Khiong: Thank you very much.

Horng Han: Thank you very much.

Ho Pei Hwa: Thank you. Terence?

Pei Hwa: Thank you. Terence?

Speaker #3: Sorry. Yeah. Yeah. Just a quick question from me. This is Terrence from JP Morgan. Just wanted to ask about Wilton. Thank you for sharing on the data center slide.

[Analyst] (J.P. Morgan): Sorry. Yeah. Just a quick question from me. This is Terence from J.P. Morgan. Just wanted to ask about Wilton. Thank you for sharing on the data center slide. But I wanted to ask, what's the monetization opportunity for Wilton? Given potentially it could be powered up by 2028. How are you looking to monetize that? And should we expect some power sales by 2028 for Wilton?

Terence Khi: Sorry. Yeah. Just a quick question from me. This is Terence from J.P. Morgan. Just wanted to ask about Wilton. Thank you for sharing on the data center slide. But I wanted to ask, what's the monetization opportunity for Wilton? Given potentially it could be powered up by 2028. How are you looking to monetize that? And should we expect some power sales by 2028 for Wilton?

Speaker #3: But I wanted to ask you know what's the monetization opportunity for Wilton given you know the potential it could be powered up by 2028.

Speaker #3: How are you looking to sort of monetize that? And should we expect some power sales by 28 for Wilton?

Speaker #4: Yeah. I'm going to ask people. People please. So we put a present CEO renewable west like he looks after the UK business as executive director of their business.

Wong Kim Yin: Yeah. I am going to ask Vipul. Vipul, please. Vipul, President and CEO, Renewables, West, looks after the UK business as Executive Director of that business. He is quite close to the situation. He is chairing the steering committee with the UK team every week to advance the UK data center agenda.

Speaker #4: So and he's quite close to the situation. He's chairing the steering committee with the UK team every

Speaker #1: Week , you know , to to advance the UK data centre agenda

Speaker #2: So in terms of monetization , there are multiple sort of revenue streams that can come out of this one . Quite simply , is it's called powered land .

Vipul Tuli: In terms of monetization, there are multiple revenue streams that can come out of this. One quite simply is, it is called powered land. The reason Wilton has that opportunity is because it is actually one of the few sites that in this timeframe, as Kim Eng already said, can actually offer a combination of grid power, local generation, as you know, Wilton has the largest private wire network in the UK, and backup power. Which obviously, if you are a data center, builder, developer, or operator, that is the first step. That provides one revenue stream. Of course, if you look at what the values of those are with the scarcity of powered land availability even outside the London area, of course, that is quite an attractive opportunity.

Speaker #2: And the the reason Wilton has that opportunity is because it is actually one of the few sites that in this time frame , as Simeon already said , can actually offer a combination of grid power , local generation , as you know , Wilton has the largest private wire network in the UK and backup power .

Speaker #2: So which obviously , if you're a data centre builder , developer or operator , that's a very , very that's the first step .

Speaker #2: So that's , that provides one . Revenue stream , of course , if you if you look at what the values of those are with the scarcity of powered land availability , even outside the London area , of course , that's quite an attractive opportunity .

Speaker #2: And the second is to provide power to that , to , to any data center where there would be some monetization of the supply of that power , which would one , one option is bring it through the grid and then supply it through our network .

Vipul Tuli: The second is to provide power to any data center where there would be some monetization of the supply of that power. One option is bring it through the grid and then supply it through our network. There are some margins that come with that one. Of course, longer term, it would be quite sensible to build behind the meter generation within Wilton itself. We have not planted in Wilton for many years, but this opportunity then opens up those options. Those are the two very straightforward power-related ones. Then, of course, there is powered shelves will get built, et cetera. That is which is potential.

Speaker #2: There's some margins that come with that one . And of course , longer term , it would be quite sensible to build behind the meter generation within Wilton itself .

Speaker #2: We haven't planted in Wilton for many years , but this this opportunity then opens up that those options . And so those are the two very straightforward power related ones .

Speaker #2: And then , of course , there's , you know , powered shells will get built , etcetera , etcetera . Which is potential Thank you .

Speaker #2: That's very clear . If I could also ask , EMA is funding RFP for new planting is Sembcorp potentially interested in . Participating in any of the RFPs for new plants ?

[Analyst] (J.P. Morgan): Thank you. That is very clear. If I could also ask, EMA is funding RFP for new planting. Is Sembcorp potentially interested in participating in any of the RFPs for new plants?

Terence Khi: Thank you. That is very clear. If I could also ask, EMA is funding RFP for new planting. Is Sembcorp potentially interested in participating in any of the RFPs for new plants?

Speaker #1: I think in relation to the to the and I , I presume you are referring to DC , CFA two , right ?

Eugene Cheng: I think in relation to the and I presume you are referring to DCCFA 2, right?

Speaker #2: Not just the the new planting for for EMA , the new new power plants .

[Analyst] (J.P. Morgan): Not, just the new planting for EMA. The new power plants.

Terence Khi: Not, just the new planting for EMA. The new power plants.

Speaker #1: Or the new power plants for EMA , which is the the ones in the 2031 2022 , we , we are in the best position to address the power needs of the country So I , I don't want to answer your question .

Eugene Cheng: Oh, the new power plants for EMA, which is the ones in 2031, 2032. We are in the best position to address the power needs of the country. I don't want to answer your question. I hope you understand it's a little bit sensitive. But we are in the best position to address the next increase in the demand and when the government I think there's a trust between government and us when it comes to addressing immediate as well as future power needs. We will do what is good for the nation as also for ourselves to address those immediate needs.

Speaker #1: I , I hope you you understand it's a it's a little bit sensitive , but we are in the best position to address the next Increase in the demand .

Speaker #1: And when the government . I think there is a trust between government and us when it comes to addressing the immediate as well as future power needs .

Speaker #1: So . So we will we will we will do what is good for the nation and also for ourselves to , to , to address those immediate needs .

Speaker #2: And , and since we are on it , then could you discuss about the DC CFA two process ? How Sembcorp participating in that ?

[Analyst] (J.P. Morgan): Since we are on it, then could you discuss about the DCCFA 2 process, how Sembcorp participating in that?

Terence Khi: Since we are on it, then could you discuss about the DCCFA 2 process, how Sembcorp participating in that?

Speaker #1: I think the , the , the honest answer is that for DC , for two specifically , we are clearly not participating yet from a DC perspective , but the DC CFA two does require , you know , the the DC operator to submit with , you know , a , an accepted a power , a grid power solution and offer .

Eugene Cheng: I think the honest answer is that for DCCFA 2 specifically, we are clearly not participating it from a DC perspective. But, the DCCFA 2 does require the DC operator to submit with an accepted grid power solution and offer. We are quite pleased to say that most of the DCs that have submitted for that have submitted with our power offer. So it is our expectation that we will be powering most of that capacity unless it gets all awarded to somebody else. But the reality is that we do feel that we are in a good position for that. Yes. But for now, it is really a power offer. We have no intentions of being involved in the DC construction for DCCFA 2.

Speaker #1: We are quite pleased to say that , you know , most of the DC's that have submitted for that , you know , have accepted have submitted with our power offer .

Speaker #1: So it is our expectation you know , we will be powering most of that capacity unless it gets all awarded to somebody else .

Speaker #1: But , you know , the , the , the reality is that we do feel that we are in a good position for that .

Speaker #1: Yes . But for now , it is really a power , a power offer , and , you know , we have not we have no intentions of , you know , being being involved in the DC construction for DC , CFA two .

Speaker #3: Yeah , please . Okay . I'll pay for from DBS . Maybe your first question on India renewable for repo . I think the grid bottleneck has has been an issue I just want there's been more newsflow recently .

Ling Xin Jin: Pei Wah, please.

Xin Jin: Pei Wah, please.

Ho Pei Hwa: Okay. Pei Wah from DBS. Maybe a first question on India renewable for Vipul. I think the grid bottleneck has been an issue. There has been more news flow recently, so wondering if that has become more concerning in terms of grid infrastructure bottleneck, especially with the influx of new capacity.

Pei Hwa: Okay. Pei Wah from DBS. Maybe a first question on India renewable for Vipul. I think the grid bottleneck has been an issue. There has been more news flow recently, so wondering if that has become more concerning in terms of grid infrastructure bottleneck, especially with the influx of new capacity.

Speaker #3: So I'm wondering if that has become more concerning in terms of infrastructure bottleneck , especially with the influx of new capacity . Yeah

Speaker #2: I think at an overall level , you're quite right . The grid has not been able to keep pace despite a massive expansions in the grid .

Vipul Tuli: I think at an overall level, you are quite right. The grid has not been able to keep pace despite massive expansions in the grid. As I had mentioned in our last briefing, there are new policies on the anvil to actually give the grid developers a lot more power to acquire land and clear the bottlenecks. Now, that is at the overall country level. If I look at our portfolio, which is more relevant, our curtailment levels are less than 1%, and that is on our operational portfolio at the moment. So I think we are in good shape, and there are rules in place that allow compensation if there is grid curtailment for any reason other than grid security.

Speaker #2: As I had mentioned in our last briefing , there are new policies on the anvil to actually give the grid developers a lot more power to acquire land and clear the bottlenecks .

Speaker #2: Now , that's at the overall country level . If I look at our portfolio , which is which is more relevant , the our curtailment levels are less than 1% and that's on our operational portfolio at the moment .

Speaker #2: So I think we are in good shape . And there are there are rules in place that allow compensation . If there is grid curtailment for any reason other than grid security .

Speaker #2: Now then the question comes , okay , we are building out close to four gigawatts , of which 2.5GW is signed . PPAs and 1.5GW .

Vipul Tuli: Now, the question comes, okay, we are building out close to 4 gigawatts, of which 2.5 gigawatts is signed PPAs and 1.5 gigawatts we are in the process of going ahead and trying to confirm those. So what happens to those? I think this is where it is worth noting what our strategy for project development is versus perhaps what many others in the industry do. Our objective is to increase electrons sold, not just rack up capacity commissioned. So what we do is, we keep a very close eye on when the grid is likely to come, and we time our project commissionings accordingly. Why is this important in India?

Speaker #2: We're in the process of going ahead and trying to confirm those . So what happens to those ? I think this is where it's worth noting what our strategy for project development is versus perhaps what many others in the industry do .

Speaker #2: Our objective is to increase electrons sold not just rack up capacity commissioned . So what we do is we keep a very close eye on when the grid is likely to come .

Speaker #2: And we Time our project commissioning accordingly . Why is this important in India Because the way the rules work for the generalized network access or NI If you come before your authorized date of network access , you could get connected because there's always some way to move the power , you know , through some route or the other .

Vipul Tuli: Because the way the rules work for the generalized network access or GNA, if you come before your authorized date of network access, you could get connected because there is always some way to move the power through some route or the other, but you get what is called a temporary GNA, TGNA. If you are on temporary GNA, the grid has no obligation to take your power. They take it on a best efforts basis and therefore can curtail, which is why you may have read some very alarming numbers. I think there was a 43% curtailment number for some players in Rajasthan a few months ago. That is because they are on TGNA, because they built their plants before their permanent GNA was ready. Our strategy is to time it to the best possible to come within a month or two of our permanent GNA.

Speaker #2: But you get what is called a temporary NI te ni . If you're on temporary ni , the grid has no obligation to take your power .

Speaker #2: They take it on a best efforts basis and therefore can curtail , which is why you may have read some very alarming numbers .

Speaker #2: I think there was a 43% curtailment number for some players in Rajasthan a few months ago that that's because they are on T ni , because they built their plants before their permanent NI was ready .

Vipul Tuli: I think there was a 43% curtailment number for some players in Rajasthan a few months ago. That is because they are on TGNA, because they built their plants before their permanent GNA was ready. Our strategy is to time it to the best possible to come within a month or two of our permanent GNA. Therefore, once that happens, the grid is obliged to take our power, even if it means backing down anyone else who might be on a temporary GNA at the time. That is how we are managing this.

Speaker #2: Our strategy is to time it to the best possible to come within a month or two of our permanent NI . Therefore , once that happens , the grid is obliged to take up power , even if it means backing down anyone else .

Vipul Tuli: Therefore, once that happens, the grid is obliged to take our power, even if it means backing down anyone else who might be on a temporary GNA at the time. That is how we are managing this.

Speaker #2: Who might be on a temporary NI at the time . That's . That's how we are managing this .

Speaker #3: Thank you . Thanks . One more question on India renewable . Given the first half is relatively weak because of the weather pattern , I just wondering whether this has any implication to our IPO .

Ho Pei Hwa: Thanks. One more question on India Renewables. Given the H1 is relatively weak because of the weather pattern, I just wondering whether this has any implication to our IPO, what is the timeline now, and any change in that?

Pei Hwa: Thanks. One more question on India Renewables. Given the H1 is relatively weak because of the weather pattern, I just wondering whether this has any implication to our IPO, what is the timeline now, and any change in that?

Speaker #3: What's the timeline now . And any change in that .

Speaker #2: I'm going to hand that to Eugene to answer .

Vipul Tuli: I'm going to hand that to Eugene to answer.

Speaker #1: Yeah . So I think the again like I've always said , you know , I've been read the riot act , somebody's staring at me .

Eugene Cheng: Well, I think, again, like I've always said, I've been read the Riot Act, somebody staring at me. But, in any case, let's call it capital recycling, and not refer to words like the three letters that you pointed out. That's sensitive. But of course, I think you have heard me mention before, we are always gearing up towards a capital recycling exercise, putting all the necessary preparations in place. Now, the war started, it created some volatility in the market. I think what is positive for us is that, if you look at recent performance of India Renewables listed. Of course, just because they're listed, it doesn't make any reference to the exact mode of capital recycling. But because they're listed, and they are performing fairly well, I think some of the recent performance, including CleanMax, has now recovered over its IPO price.

Speaker #1: But in any case , let's call it capital recycling . Right . And , and not refer to words like , like the three letters that you that you pointed out , right ?

Speaker #1: It's , you know , sensitive . Now , but of course , I think you have heard me mention before . We are always gearing up towards a capital recycling exercise , putting all the necessary preparations in place .

Speaker #1: Now , the war started , you create some volatility in the market . I think . What is positive for us is that if you look at a recent , you know , performance of India Renewables listed , you know , of course , just because they're listed , it doesn't make any reference to the exact mode of capital recycling .

Eugene Cheng: I think what is positive for us is that, if you look at recent performance of India Renewables listed. Of course, just because they're listed, it doesn't make any reference to the exact mode of capital recycling. But because they're listed, and they are performing fairly well, I think some of the recent performance, including CleanMax, has now recovered over its IPO price. Also, a recent listing, Juniper, I think we saw huge coverage of the book. How many times covered?

Speaker #1: Okay . But because they are listed , they are performing fairly well . I think some of the recent performance include Cleanmax has now recovered over its IPO price .

Speaker #1: Also , you know , a recent listing , of juniper , I think we saw huge coverage of the about .

Speaker #2: 26 times . Six times 6 or 7 times overall .

Eugene Cheng: Also, a recent listing, Juniper, I think we saw huge coverage of the book. How many times covered?

Speaker #1: Yes . On on the books . So it gives a lot of indication capital recycling exercise is actually good . So you would imagine that we will be gearing towards a capital recycling exercise .

Vipul Tuli: I think about 26 times QIB.

Eugene Cheng: 26 times.

Vipul Tuli: about six, seven times over.

Eugene Cheng: Yes, on the books. It gives a lot of indication that the capital recycling exercise is actually good. You would imagine that we will be gearing towards a capital recycling exercise. I think in terms of timing, it is quite difficult for us to guide you, but you would imagine that we are certainly putting ourselves in a position to take advantage of the momentum that we see in the market.

Speaker #1: I think in terms of , of timing , it's quite difficult for us to guide you , but you would imagine that we are certainly putting ourselves in a position to take advantage of the momentum that we see in the market .

Speaker #2: Maybe , maybe to supplement Eugene's comment , it's not just climax and juniper . All the listed entities in renewables in India , which maybe this time last year were languishing somewhat , they are all , you know , at much better levels today .

Vipul Tuli: Maybe to supplement Eugene's comment. It is not just CleanMax and Juniper. All the listed entities in renewables in India, which maybe this time last year were languishing somewhat, they are all at much better levels today, and of course, you would know that. I think what I would like to add is the reason why. If you are looking at just delivery of projects that were promised and so on, a lot of that has come along. More importantly, with the Middle East situation, we are actually seeing a very strong push for generation capacity additions in India supported by policy, particularly wherever there is local resource. What are the local resources for India? There is coal, there is renewables. These are the two. Hydro is of course there, but that gets capped out at a certain level given the rivers and so on.

Speaker #2: And and of course , you would know that I think the what I'd like to add is the reason why , if you're looking at , you know , just just delivery of projects that were promised and so on , a lot of that has come along , but more importantly , with the Middle East situation , we're actually seeing a very strong push for generation capacity additions in India , supported by policy , particularly wherever there is local resource .

Speaker #2: So what are the local resources for India ? There's coal , there's renewables . So these are the two hydro is of course there .

Speaker #2: But that gets capped out at a certain level given the rivers and so on . So there is actually a very strong sort of policy push .

Speaker #2: And perhaps that's that's , you know , putting tailwinds into the market . And , you know , the only other thing I'd just maybe it's worth mentioning is that .

Vipul Tuli: There is actually a very strong sort of policy push, and perhaps that is putting tailwinds into the market. The only other thing I would just maybe it is worth mentioning is that obviously we factor that into all our assessments and evaluations of what we do. But does this materially affect our plans one way or the other? For us, we are quite clear that we now have a strong portfolio geared towards growth. We have our connectivity 100% secured. We have a very large proportion of our land secured as well. We now have 2.5 gigawatts of signed PPAs, which are now going into construction. We have 1.5 gigawatts of awards, which are still very much in discussion to try and convert into contracts. That agenda has to get done, and we factor that into our calculations. Thank you.

Speaker #2: You know , obviously we'll factor that into all our , all our , all our assessments and evaluations of what we do . But does this materially affect our plans one way or the other for us , we are quite clear that we now have a strong portfolio geared towards growth .

Speaker #2: We have our connectivity 100% secured . We have a very large proportion of our land secured as well . We now have 2.5GW of signed PPAs , which are now going into construction .

Speaker #2: We have a 1.5GW of awards , which are still very much in discussion to try and to try and convert into contracts . So that agenda has to get done .

Speaker #2: And we factor that into into our calculations . Thank you .

Speaker #3: Thanks .

Speaker #1: Just as a reminder , it's in reference to a capital recycling exercise . Yes . Thanks .

Speaker #3: Thanks . Yeah . Just to continue on that topic , I just wondered what other assets or business that we may consider to capital recycle as .

Ho Pei Hwa: Clear. Thanks.

Pei Hwa: Clear. Thanks.

Eugene Cheng: Just as a reminder, Pei Hwa, it is in reference to a capital recycling exercise.

Speaker #3: And then also bigger , bigger scale of things . I mean , I sure holders are happy to see you increase your dividend .

Ho Pei Hwa: Capital recycling.

Pei Hwa: Capital recycling.

Eugene Cheng: Yes. Thanks.

Ho Pei Hwa: Thanks. Yeah, just to continue on that topic. I just wonder what other asset or business that we may consider to capital recycle. Also bigger scale of things. Shareholders are happy to see you increase your dividend. At the same time, we are also doing deleveraging. How should we think about our M&A, our growth forward? It is more of those things, yeah.

Pei Hwa: Thanks. Yeah, just to continue on that topic. I just wonder what other asset or business that we may consider to capital recycle. Also bigger scale of things. Shareholders are happy to see you increase your dividend. At the same time, we are also doing deleveraging. How should we think about our M&A, our growth forward? It is more of those things, yeah.

Speaker #3: And the same time we are also doing deleveraging and how should we think about our M&A , our growth forward is more bigger things .

Speaker #3: Yeah .

Speaker #1: I think In in in relation to that right . We are calibrating I think our outlook when we look further into the next five years , we are quite careful .

Speaker #1: You know , to ensure that we are in a position to capture growth . I think that is that will always be on our agenda .

Eugene Cheng: Well, Pei Hwa, in relation to that, we are calibrating, I think, our outlook when we look further into the next five years. We are quite careful to ensure that we are in a position to capture growth. I think that will always be on our agenda, right? We are also of the view that we have to be very focused on capturing growth along key themes that Sembcorp has the right to play. Also thematically, we are comfortable that it will be a secular trend that will transcend a very long period. I think some of these themes that you would imagine would be, okay, number one, clearly looking at growing power provision to growing AI and data center demands. That would be one key theme that we are playing into.

Speaker #1: Right . But we are also of the view that we have to be very focused on , you know , capturing growth along key themes that Sembcorp has the right to play .

Speaker #1: And also thematically , we are comfortable that it will be a trend that would that would be a secular trend that will transcend , you know , a , a fairly long period .

Speaker #1: So I think some of these teams that you would imagine would be , okay , number one , clearly , you know , looking at at a at a growing power provision to going AI and data center demands , right ?

Speaker #1: So that would be one key theme that will be playing into . Now I'm going to talk about in broad themes because I don't think we are at a point where we can really talk about specific capital allocation .

Speaker #1: Right ? So I talk about broad . So power into a growing , AI slash data center , thematic . And of course , to that Sembcorp does have a very strong right to play because in many of the markets that we are in , right , they are actually attractive to many of these AI and data center players .

Eugene Cheng: Now, I am going to talk about in broad themes because I do not think we are at a point where we can really talk about specific capital allocation. I will talk about broad themes. So, power into a growing AI/data center thematic. Of course, to that, Sembcorp does have a very strong right to play because in many of the markets that we are in they are actually attractive to many of these AI data center plays. We are talking about Wilton, which fingers crossed, imminent for powered land. We already have plots of land secured in Vietnam that is already data center shovel-ready towards RFS. Batam and of course, Australia now with Alinta already in the portfolio. We are getting very strong reverse inquiries. I do not use that word, but looking at growth along these strategic themes are important.

Speaker #1: And we're talking about Wilton , which are , you know , fingers crossed , imminent , right ? For power . We already have a have a plot of land secured in Vietnam .

Speaker #1: That is that is already data center are shovel ready towards Ahrefs bottom and and and , you know , of course Australia now with you know Alinta already in the portfolio and you know we are getting very strong reverse inquiries .

Speaker #1: So I don't use that word . But you know looking at , you know , growth along this strategic teams are important . Others will obviously be , you know , along the along the tailwinds of what we've always done .

Speaker #1: Well , I think we are in the , in the , in the , in the , in the , you know , the , the theme of energy transition .

Speaker #1: So continue to be , be focused on allocating capital for the purpose of renewables growth is also important . But we'll be very careful of the markets that we are in .

Speaker #1: And right now , clearly is a , is a is a key bright spot for that . And the capital recycling exercise will , you know , give us access to , to a well cost of capital to , to allow us to continue to , to grow there .

Eugene Cheng: Others will obviously be along the tailwinds of what we have always done well. I think we are in the theme of energy transition. So continue to be focused on allocating capital for the purpose of renewables growth is also important. But we will be very careful of the markets that we are in. Right now, clearly, India is a key bright spot for that. The capital recycling exercise will give us access to a well-priced cost of capital to allow us to continue to grow there. Other key themes will be, of course, Australia. I think Australia power fundamentals and also increasing demand, as Jeff has pointed out, coming through from the AI thematics will also allow us to continue to grow there.

Speaker #1: Right . And then , you know , other key themes will be , of course , Australia . I think , you know , Australia , power fundamentals and also increasing , you know , demand as Jeff has pointed out , coming through from the AI thematics will also allow us to continue to to grow there .

Speaker #1: Right . And then , you know , we also see the possibilities of , you know , looking how we could expand our LNG networks to take advantage of the core baseload markets that we're in .

Speaker #1: So this will be some of the key growth themes that we will still be looking at it . Of course , if we are drill , drill down to a capital allocation thoughts , we'll have to be very selective , right ?

Speaker #1: Because the key goal ultimately is to be able to accrete our ROI and ROE , right ? So we will be taking that lens towards that .

Speaker #1: Now then when we flip into , you know , the other key theme of our capital management , I think we are quite comfortable to say that when we look at , you know , the base cash flow generation that we have , right ?

Eugene Cheng: We also see the possibilities of looking how we could expand our LNG networks to take advantage of the core base load markets that we are in. So these will be some of the key growth themes that we will still be looking at it. Of course, if we drill down to capital allocation thoughts, we have to be very selective because the key goal ultimately is to be able to accrete our ROIC and ROE. So we will be taking that lens towards that. Well, then when we flip into the other key theme of capital management, I think we are quite comfortable to say that when we look at the base cash flow generation that we have.

Speaker #1: We would be very comfortable over the next five years to say that in the base case scenario , we would be more than ready to be able to deliver the balance sheet , right ?

Speaker #1: Naturally . Now then , the speed at which we deliver the balance sheet , of course , will be informed by the specific opportunities we see along those growth themes .

Speaker #1: But in general , we will deliver the balance sheet . Now then , in light of being able to deliver the balance sheet , then are we able to increase , you know , the capital ?

Speaker #1: Sorry , the cash flow returns to our shareholders and we see an opportunity for us to do that . Quite comfortably actually . Right .

Eugene Cheng: We would be very comfortable over the next five years to say that in the base case scenario, we would be more than ready to be able to delever the balance sheet naturally. The speed at which we delever the balance sheet, of course, will be informed by the specific opportunities we see along those growth themes. But in general, we will delever the balance sheet. Well, then in light of being able to delever the balance sheet, then are we able to increase the cash flow returns to our shareholders? We see an opportunity for us to do that quite comfortably, actually. That we have the capacity. I do not want to commit too far forward on any payout ratios or so, but we do have the capacity to quite comfortably catch up with our peers in a reasonable timeframe.

Speaker #1: That we will be able to we have the capacity , right . I don't want to commit too far forward on any payout ratios or so .

Speaker #1: But we do have the capacity to quite comfortably catch up with with our peers . You know , in , in a reasonable time frame .

Speaker #1: Now , you have always heard me talk about this . The cash cost of dividend increase to us has not has always been low .

Speaker #1: Right ? Every cent of dividend increase , you can do the math is a $17 million increase . Okay . And the reality is that , you know , from a from a funding perspective , we have always have a lot of cost of capital advantages , you know , in terms of our , our debt as well as our long term bond capital markets , for example , we funded Alinta .

Speaker #1: Right ? You know , close to a 6.5 billion of total debt on balance sheet , plus new debt , right . And we are able to average down on the cost of borrowing , right ?

Eugene Cheng: You have always heard me talk about this. The cash cost of dividend increase to us has always been low. Every cent of dividend increase, you can do the math, is a SGD 17 million increase. Okay? The reality is that from a funding perspective, we have always have a lot of cost of capital advantages in terms of our debt as well as our long-term bond capital markets. For example, we funded Alinta close to SGD 6.5 billion of total debt on balance sheet plus new debt. We are able to average down on the cost of borrowing. We have funded SGD 6.5 billion using at 3.4% cost of capital. So because of that, we do not have a large equity base in terms of our funding.

Speaker #1: We are funded 6.5 billion using a 3.4% cost of cost of capital . So , you know , because of that , we do have we have don't have a , a large equity base in terms of our funding , right .

Speaker #1: And hence , you know , our ability to grow cash flow returns back to our , shareholders . It's not very demanding from a , from a , from a , from a cash flow standpoint , right .

Speaker #1: So I think when you put that into perspective , I think the goal was still to be to pursue growth right along those key themes , but be very careful in terms of how we are focused on , you know , accretion on our ROI and ROE .

Speaker #1: And yet with the cash flow generation ability already in the balance sheet today , we still see the the possibility of deleveraging . And yet increasing our dividend .

Speaker #1: Yeah . So .

Speaker #3: So , so Eugene , the , the figure was asking about how else one might recycle , right . And you spoke about the purpose at the end of the day is to access capital if we need it so that you can recycle .

Eugene Cheng: Our ability to grow cash flow returns back to our shareholders is not very demanding from a cash flow standpoint. I think when you put that into perspective, the goal was still to pursue growth along those key themes, but be very careful in terms of how we are focused on accretion on our ROIC and ROEs. Yet with the cash flow generation ability already in the balance sheet today, we still see the possibility of a deleveraging and yet increasing our dividend.

Speaker #3: Right ? Because as we grow , we become bigger . And we're in a capital intensive industry . So you want to be able to access capital .

Speaker #3: So and to enable the growth , right , without having to , to , to come back to shareholders to ask for capital .

Speaker #3: But the other purpose could be to , also to , to access a high valuation opportunistically when the opportunity arises , just like in the case of potentially India , right ?

Speaker #3: So , so but what are the things inside the Sembcorp portfolio that can be open for , for recycling , you know , is it your , your , your portfolio , your , your You know , the , the , the , the really big factories , recurring cash flow , is it the gas portfolio in Singapore ?

Wong Kim Yin: Yu Jin, Hui Wang was asking about how else one might recycle. You spoke about the purpose at the end of the day is to access capital if we need it so that you can recycle, because as you grow, you become bigger, and we are in a capital-intensive industry, so you want to be able to access capital so as to enable the growth, without having to come back to shareholders to ask for capital. But the other purpose could be to also access a high valuation opportunistically when the opportunity arises, just like in the case of potentially India. But what are the things inside the Sembcorp portfolio that can be open for recycling? Is it your IUS portfolio, the ready-built factories, recurring cash flow? Is it the Gas portfolio in Singapore? Is it the Alinta?

Speaker #3: You know , is it the , you know , I think I think .

Speaker #1: I think I think to put it very circum , respectfully , right . There will be a range of capital recycling options . Okay .

Speaker #1: And to put it very bluntly , everything is available for capital recycling from an asset perspective , right ? So it will always boil down to , you know , what is the , what is the , the cost of capital ?

Speaker #1: I'm able to achieve right in the capital recycling exercise versus , you know , the use of proceeds . So I think within the Iuss perspective , you will notice that , you know , I don't speak a lot of capital of , of capital in significant capital , incremental capital deployment into EOS because India , particular lobby itself , we see many capital recycling opportunities .

Eugene Cheng: I think to put it very circumspectly, there will be a range of capital recycling options. To put it very bluntly, everything is available for capital recycling from an asset perspective. It will always boil down to what is the cost of capital I am able to achieve in the capital recycling exercise versus the use of proceeds. I think within the IUS perspective, you will notice that I do not speak a lot of significant capital, incremental capital deployment into IUS because in the particular LOB itself, we see many capital recycling opportunities. I think one of the key things is that for the Water portfolio, exiting lower returns municipal-type plants and then redeploying it or increasing capacity to organically grow our industrial water plant is there.

Speaker #1: I think one of the key things is that for for the water portfolio exiting lower returns , you know , municipal type plants and then redeploying it or , you know , increasing capacity to organically grow our industrial water plants is there , right .

Speaker #1: I think in the urban business model , it is already , to a certain extent , self capital recycling , right ? In terms of , of the land bank and also , you know , as we build up the Rrbs , we are already looking at the possibility of capital recycling .

Speaker #1: Some of the already built factories and ready built warehouses ahead of time . So that's , that's what our us , I think on a broader team , you know , more across the renewables portfolio , we will selectively look at a capital recycling .

Speaker #1: I think the China you know , even a given its situation right now , it is always a target that that that we look at for for capital recycling .

Speaker #1: I think more broadly across Australia because of the significant opportunities that we see , right . We will have to think of our structures to fuel growth , right .

Eugene Cheng: I think in the Urban business model, it is already to a certain extent self-capital recycling in terms of the land bank. As we build out the RBS, we are already looking at the possibility of capital recycling some of the ready-built factories and ready-built warehouses ahead of time. So that is for IUS. I think on a broader theme, more across the Renewables portfolio, we will selectively look at the capital recycling. I think China, even given its situation right now, it is always a target that we look at for capital recycling. I think more broadly, across Australia, because of the significant opportunities that we see, we will have to think of structures to fuel growth. Many of these capital recycling opportunities will probably come in the development of the Renewables portfolio.

Speaker #1: And , you know , many of these capital recycling opportunities will probably come in , you know , the development of their renewables portfolio .

Speaker #1: We certainly , you know , may not see the need to a whole 100% of the equity of the renewables portfolio as long as we have the the electrons for distribution , right ?

Speaker #1: So that's one possibility , right . And , and , and as we look at the , the , the possibilities of a scaling in assets as a result of AI driven growth , then , you know , we'll look at capital partnerships for capital recycling as well .

Speaker #1: So I think more broadly , I would characterize it that way . Yeah .

Speaker #3: So so again , we're very clear what is the purpose , right ? Are we are divesting for managing exposure . We divesting to recycle capital .

Speaker #3: Are we trying to access capital or are we trying to access valuation ? So we the purpose of doing it will be very clear .

Eugene Cheng: We certainly may not see the need to hold 100% of the equity of the Renewables portfolio as long as we have the electrons for distribution, right? There is one possibility, right? As we look at the possibilities of scaling in assets as a result of AI-driven growth, then we will look at capital partnerships for capital recycling as well. I think more broadly, I would characterize it that way.

Speaker #3: And then the short answer to your question is that actually the the we're here to manage value . So to the extent that the opportunity .

Speaker #3: We will we will we are open to all those possibilities . So , so you just describe a wide range of it . And I , I would I'll be very happy to hear your feedback as to whether or not you think , you know , the , the especially analyst community , when you look at so many other peer groups , when you look at us and you say , which are the ones that we can think about , we're very open to that suggestion .

Speaker #3: We took a long time to answer that . I saw hands from the back , so we need to .

Wong Kim Yin: We are very clear what is the purpose, right? Are we divesting for managing exposure? Are we divesting to recycle capital? Are we trying to access capital or are we trying to access valuation? The purpose of doing it will be very clear. The short answer to your question is that actually we are here to manage value. To the extent there is the opportunity, we are open to all those possibilities. Yu Jin described a wide range of it. I will be very happy to hear your feedback as to whether or not you think, especially analyst community, when you look at so many other peer groups, and you look at us and then say, "Which are the ones that we can think about?" We are very open to that suggestion. We took a long time to answer that.

Speaker #4: Yeah . So

Speaker #3: Share from business times

Speaker #5: Yeah . Thank you . Hi , I'm Sharanya from the Business Times . I just have a follow up question on Capitol Recycling .

Speaker #5: Actually , specifically in China . You highlighted that some regions remain challenging , like Hunan and Ningxia . Are there any plans to divest the underperforming assets there ?

Speaker #5: I think in the previous briefing , someone also asked if there's any impairment risk , like what's your assessment of that ? Also wanted to ask a second question about DC for two .

Speaker #5: You mentioned that you are involved in supplying power to to some of the applicants . Are you providing purely guess solutions or are you also involved in providing the green component that's mandatory ?

Speaker #5: Like biomass ? And if it's biomass , could you share a bit more color on , you know , like where you procuring your feedstock from and what , what type of biomass ?

Wong Kim Yin: I saw hands from the back, so we need to

Ling Xin Jin: Share from The Business Times. Yeah.

Xin Jin: Share from The Business Times.

Speaker #5: I have a third question on power import projects . So you have conditional approvals . Now for the one that was just announced .

Sharanya Pillai: Yeah. Thank you. Hi, I am Sharenia from The Business Times. I just have a follow-up question on capital recycling, actually. Specifically in China, you highlighted that some regions remain challenging, like Hunan and Ningxia. Are there any plans to divest the underperforming assets there? I think in the previous briefing, someone also asked if there is any impairment risk. What is your assessment of that? I also wanted to ask a second question about DCCFA 2. You mentioned that you are involved in supplying power to some of the applicants. Are you providing purely gas solutions or are you also involved in providing the green component that is mandatory, like biomass? If it is biomass, could you share a bit more color on where are you procuring your feedstock from and what type of biomass? I have a third question on power import projects.

[Analyst] (The Business Times): Thank you. Hi, I am Sharenia from The Business Times. I just have a follow-up question on capital recycling, actually. Specifically in China, you highlighted that some regions remain challenging, like Hunan and Ningxia. Are there any plans to divest the underperforming assets there? I think in the previous briefing, someone also asked if there is any impairment risk. What is your assessment of that? I also wanted to ask a second question about DCCFA 2. You mentioned that you are involved in supplying power to some of the applicants. Are you providing purely gas solutions or are you also involved in providing the green component that is mandatory, like biomass? If it is biomass, could you share a bit more color on where are you procuring your feedstock from and what type of biomass? I have a third question on power import projects.

Speaker #5: And also for Sarawak and Vietnam . Do you have any timeline on when the case will progress to conditional licenses and you mentioned that the costs are very high .

Speaker #5: And Sembcorp also has experience in this import business with the project , like so , given your experience , what Break-even timeline do you expect on these projects ?

Speaker #5: Yeah , especially for the Johore one . Since you are developing your own floating power plant , and then also for the others .

Speaker #5: Yeah , thank you

Speaker #3: First , China When things are not going well , generally not the best time to sell , right ? It'll be selling it at a discount .

[Analyst] (The Business Times): You have conditional approvals now for the Johor one that was just announced and also for Sarawak and Vietnam. Do you have any timeline on when the CAs will progress to conditional licenses? You mentioned that the costs are very high and Sembcorp also has experience in this import business with the ENEGEM project. Given your experience, what breakeven timeline do you expect on these projects? Especially for the Johor one since you are developing your own floating power plant and also for the others. Thank you.

Sharanya Pillai: You have conditional approvals now for the Johor one that was just announced and also for Sarawak and Vietnam. Do you have any timeline on when the CAs will progress to conditional licenses? You mentioned that the costs are very high and Sembcorp also has experience in this import business with the ENEGEM project. Given your experience, what breakeven timeline do you expect on these projects? Especially for the Johor one since you are developing your own floating power plant and also for the others. Thank you.

Speaker #3: And do we need the cash back ? We don't . Right . I just told you that we're strong cash flow and all that .

Speaker #3: So if somebody comes along with a proposition that can help to enhance value with a merger or something like that , that's a possibility .

Speaker #3: But the short answer to your question is that I don't think it is top on the priority list to sell China . Now , right .

Speaker #3: Especially we have a not a very good first half in terms of resource . We experiencing tariff reform . We've still got curtailment that we expect with the build out of transmission .

Speaker #3: You could ease . So we are not in a hurry to do something like that . When you know there's no gun to the head .

Wong Kim Yin: First, China. When things are not going well, generally not the best time to sell, right? You will be selling it at a discount. Do we need the cash back? We do not. I just told you that we are strong cash flow and all that. If somebody comes along with a proposition that can help to enhance value with a merger or something like that is a possibility. The short answer to your question is that I do not think it is top on the priority list to sell China now. Especially we have not a very good H1 in terms of resource. We are experiencing tariff reform. We have still got curtailment that we expect with the build-out of transmission we could ease. We are not in a hurry to do something like that when there is no gun to the head. That is China, if you ask me.

Speaker #3: So that's that's China . If you if you ask me , but we are managing it carefully to make sure that we we have as much as possible matching cost structures to the to the revenue structure .

Speaker #3: Right . And , and that's something that we will continue to do . And also to make sure that the assets remain in good condition .

Speaker #3: And so that then when the right time comes , then we can consider . But today , since you are from BT , I expect that you'll be writing something .

Wong Kim Yin: The short answer to your question is that I do not think it is top on the priority list to sell China now. Especially we have not a very good H1 in terms of resource. We are experiencing tariff reform. We have still got curtailment that we expect with the build-out of transmission we could ease. We are not in a hurry to do something like that when there is no gun to the head. That is China, if you ask me.

Speaker #3: So if you have to quote me , the the I would say that we are not selling . China is not a priority in the immediate future .

Speaker #3: That means the next six months . Yeah . In terms of the DC CFA , I will ask Eugene to help me power import in terms of the timing .

Speaker #3: And again , I think the the I don't have a fixed timing in mind this projects have their own life in terms of the , the , the .

Wong Kim Yin: We are managing it carefully to make sure that we have as much as possible matching cost structures to the revenue structure. That is something that we will continue to do and also to make sure that the assets remain in good condition. So that then when the right time comes, then we can consider. Today, since you are from BT, I expect that you will be writing something. If you had to quote me, I would say that selling China is not a priority in the immediate future. That means the next 6 months. In terms of the DCCFA, I will ask Eugene to help me. Power import in terms of the timing, again, I think I do not have a fixed timing in mind. These projects have their own life in terms of the. It takes on its own life.

Speaker #3: It takes on its own life . That's that's the right way to put it . So what we want to do is to make sure that we are ready when the stakeholders are ready .

Speaker #3: Right . But today , what I've said just now , I , I , I stand by it is that today what is being talked about as the power price , we do not see a match between what is what is the cost from upstream matching the cost or the matching the desire to pay from the downstream , which is our customer .

Speaker #3: So in other words , we are standing in between and we're saying that , look , we will be talking to upstream import exporters , right ?

Speaker #3: We are the importers . Exporters are telling us this is the price that they need in order to sell the power to us .

Speaker #3: And when we look at our customers downstream , when we talk to them , they are not willing to pay the price that is being demanded upstream .

Speaker #3: So we , the again , if you have to quote me , it will be we , we , we have to wait for the right opportunity whereby there is a matching between the upstream and downstream expectations in terms of price , right .

Wong Kim Yin: That is the right way to put it. What we want to do is to make sure that we are ready when the stakeholders are ready. Today, what I said just now, I stand by it, is that today what is being talked about as the power price we do not see a match between what is the cost from upstream matching the cost or matching the desire to pay from the downstream, which is our customer. In other words, we are standing in between and we are saying that, look, we will be talking to upstream exporters. We are the importers. Exporters are telling us this is the price that they need in order to sell the power to us. When we look at our customers downstream, when we talk to them, they are not willing to pay the price that is being demanded upstream.

Speaker #3: So and then how long it will take . I do not have a crystal ball to , to address that . I'm sorry about that .

Speaker #3: But what we what we want to do is that we think eventually will come and we want to position ourselves to be there when the conditions are matching This is .

Speaker #1: I think , on DC , CFA two . Clearly , if you look at in general , the requirements of DC , CFA two , or maybe I'll ask Chuck to help me answer that .

Speaker #1: Sorry , he

Speaker #3: Sorry

Speaker #6: I think the question is whether we just offer the green , the the gas . No , it's a bundle . Yeah . So as you know , we also are issued the badminton pilot scheme .

Wong Kim Yin: Again, if you had to quote me, we have to wait for the right opportunity whereby there is a matching between the upstream and downstream expectations in terms of price. How long it would take I do not have a crystal ball to address that. I am sorry about that. What we want to do is that we think eventually it will come, and we want to position ourselves to be there when the conditions are matching. DCCFA.

Speaker #6: We have also the whole suite of other things in the green part . So as a proposal , depending on the customers , we do customize all the green solutions together to guess for customers needs .

Speaker #6: Yeah Yes . It'll be imported . And , and in our scheme that we have submitted is actually from different sources , we are still working on the sources .

Speaker #6: Yeah .

Speaker #5: Thank you .

Speaker #3: Thank you very much . I'll just take several online questions . Most of them have actually been answered through the questions raised by the analysts as well .

Eugene Cheng: I think on DCCFA 2, clearly, if you look at, in general, the requirements of DCCFA 2. Maybe I will ask Chop to help me answer that. Sorry.

Speaker #3: But in terms of the gas and related services segment , there's a question on the assumptions behind the higher net profit for the second half of this year .

Wong Kim Yin: He offered.

Koh Chiap Khiong: I think the question is whether we just offer the gas. No, it's a bundle.

Speaker #3: For Gers . Is it because of the start up of the new 600 megawatt plant ? And also , what's the rationale for acquiring a 20% stake in Aster Power

Eugene Cheng: Yeah.

Koh Chiap Khiong: So as you know, we also issued the biomethane pilot scheme. We have also the whole suite of other things in the green part. As a proposal, depending on the customers, we do customize all the green solutions together with gas for customers' needs. Yes, it will be imported.

Speaker #1: Do you want to do that ? Yeah , I can answer the first question . Thanks , Yuan , for that question Thanks , general , the question I think , you know , the the first first things first is that we can't think of our Singapore gas business as , okay , we're adding in a new a plant and immediately there will be a step up of a , you know , earnings that will come because , you know , it comes contracted a new contract that comes with the plant .

[Analyst] (The Business Times): From which country?

Sharanya Pillai: From which country?

Koh Chiap Khiong: In our scheme that we have submitted, is actually from different sources. We are still working on the sources.

[Analyst] (The Business Times): Thank you.

Sharanya Pillai: Thank you.

Ling Xin Jin: Thank you very much. I will just take several online questions. Most of them have actually been answered through the questions raised by the analysts as well. But in terms of the Gas and Related Services segment, there is a question on the assumptions behind the higher net profit for the H2 of this year for GRS. Is it because of the startup of the new 600-megawatt plant? What is the rationale for acquiring a 20% stake in Aster Power?

Xin Jin: Thank you very much. I will just take several online questions. Most of them have actually been answered through the questions raised by the analysts as well. But in terms of the Gas and Related Services segment, there is a question on the assumptions behind the higher net profit for the H2 of this year for GRS. Is it because of the startup of the new 600-megawatt plant? What is the rationale for acquiring a 20% stake in Aster Power?

Speaker #1: Right . We have to see it as a Singapore has a a strong portfolio of contracts ranging from very long term to A to a to a to a short term .

Speaker #1: And we have a generation fleet . And then the generation fleet will then fulfill those contracts in the best way that it can , together with our gas portfolio .

Speaker #1: So that is that is the right way to think about it . So in the second half , as the as the CCP for comes in , how does it add to the portfolio ?

Wong Kim Yin: You want to answer?

Eugene Cheng: Yeah, I can answer the first question. Thanks, Yuan Long, for that question. Thanks, Yuan Long, for the question. I think first things first is that we cannot think of our Singapore gas business as, okay, we are adding in a new plant, and immediately there will be a step-up of earnings that will come because a new contract that comes with the plant. We have to see it as Singapore has a strong portfolio of contracts ranging from very long-term to short-term, and we will have a generation fleet. The generation fleet will then fulfill those contracts in the best way that they can together with our gas portfolio. That is the right way to think about it. In the H2, as the CCP4 comes in, how does it add to the portfolio?

Speaker #1: So I would say number one , there will be a hit rate efficiencies . So the so you would imagine that we would be running the , the , the CCP for a baseload .

Speaker #1: And hence , as a result , the heat rates that it will be able to achieve , it's lower . It's almost a 10 to 15% or lower compared to the , the , the , the current F class machines , so that will translate into A to A to A to a better , you know , a more efficient cost usage for the purpose of generation .

Speaker #1: So that's , that's one , one element . The second element will be if you hear a recall early on , I mentioned that we will enter into second half with higher contract levels , you know , probably about 100 to 200MW more .

Speaker #1: Right . For for Singapore . So these are contract levels that will be generating for that was not contributing in the first half .

Speaker #1: So the higher contract levels on the contract side of things will also , you know , help to to improve the profits . And the third thing is you also have heard me mention early on , we have excess gas coming into a second half , which means that we have more gas than our contracted portfolio .

Eugene Cheng: I would say, number one, there will be heat rate efficiencies. You would imagine that we would be running the CCP4 at base load, and hence, as a result, the heat rates that it will be able to achieve is lower. It is almost 10% to 15% lower compared to the current F-class machines. That will translate to a better, more efficient cost usage for the purpose of generation. That is one element. The second element will be, if you recall, earlier on, I mentioned that we will enter into H2 with higher contract levels, probably between 100 to 200 megawatts more for Singapore. These are contract levels that we will be generating for that was not contributing in H1. The higher contract levels on the contract side of things will also help to improve the profits.

Speaker #1: Right . So with that and the CCP for currently in the portfolio , we do have an generation capacity for us to optimize the excess gas , right .

Speaker #1: And our options are to do that , which we were was not there in the first half , was to either generate more than our contract levels into the pool .

Speaker #1: If the spark spreads , make sense , or we could monetize the gas by selling it . If the implied margins spark spreads makes sense .

Speaker #1: So the is a combination of these three elements , which was not in the first half . That will , you know , essentially drive a second half to have , you know , stronger profits than the first half .

Speaker #3: And above . And on top of that , the the of course , we just told you that in July we are seeing the spark spreads increasing , right .

Eugene Cheng: The third thing is, you also have heard me mention early on, we have excess gas coming into H2, which means that we have more gas than our contracted portfolio. With that and the CCP4 currently in the portfolio, we do have additional generation capacity for us to optimize the excess gas. Our options to do that, which was not there in H1, was to either generate more than our contract levels into the pool if the spark spreads make sense, or we could monetize the gas by selling it if the implied margins spark spreads make sense. It is a combination of these three elements, which was not there in H1, that will essentially drive H2 to have stronger profits than H1.

Speaker #3: So so multiple dimensions , some are locked in or we can count on some are market related , but we are quite confident that all these things .

Speaker #3: A good part of it will come through Rationale for acquiring 20% stake in Aster . Very simple . As part of that , they are signing us with exclusive gas supply contract that a contract that we're very happy with .

Speaker #3: So , so so the the gas contract is , is a is a very is , is a actually the important part of the deal .

Speaker #4: Okay .

Speaker #3: Two other questions on Alinta , the guidance is for a 100 million contribution in terms of net profit for the second half . What proportion of this earnings are anchored by long term commercial contracts versus retail contracts .

Wong Kim Yin: Above and on top of that, of course, we just told you that in July, we are seeing the spark spreads increasing. Multiple dimensions, some are locked in or we can count on, some are market related, but we are quite confident that all these things, a good part of it, will come through. Rationale for acquiring 20% stake in Aster Power is very simple. As part of that, they are signing us with exclusive gas supply contract. A contract that we are very happy with. The gas supply contract is actually the important part of the deal.

Speaker #3: And then in terms of the Alinta completion , have you identified which renewable projects you will be pursuing over the next 12 to 24 months

Speaker #1: Yeah , I think why don't I answer a . Question ? 16 the second one , and then I'll ask Jess up to answer the the the first one .

Speaker #1: Okay . So I think in relation to the renewable projects that will look in the next 12 to 24 months , well , some of this is already a publicly known in an press release .

Speaker #1: We would be looking at a 100 megawatt or 212 megawatt hour battery at Wagerup , like this one , we will also be looking at a a another Bess project , which is a reef Plains one .

Ling Xin Jin: Two other questions on Alinta Energy. The guidance is for AUD 100 million contribution in terms of net profit for H2. What proportion of these earnings are anchored by long-term commercial contracts versus retail contracts? In terms of the Alinta Energy completion, have you identified which renewable projects you will be pursuing over the next 12 to 24 months?

Xin Jin: Two other questions on Alinta Energy. The guidance is for AUD 100 million contribution in terms of net profit for H2. What proportion of these earnings are anchored by long-term commercial contracts versus retail contracts? In terms of the Alinta Energy completion, have you identified which renewable projects you will be pursuing over the next 12 to 24 months?

Speaker #1: And in addition to that , you would have also seen in press release that we have actually signed a long term PPA with Water Corp , right , which will underpin a wind farm that that that what we call the Murray wind farm , close to 500MW .

Speaker #1: So that will be developed as well . And then from a cod timeline , the Murray wind farm probably won't be in the next 12 to 24 months , but essentially , you know , this will be the key projects that we'll be looking at .

Eugene Cheng: Well, I think why don't I answer question 16, the second one, and then I'll ask Jess out to answer the first one. So I think in relation to the renewable projects that we'll look in the next 12 to 24 months, well, some of this is already publicly known in Alinta's own press release. We would be looking at 100 MW or 212 MWh battery at Wagerup. We will also be looking at another BESS project, which is the Reeves Plains one. In addition to that, you would have also seen in Alinta's press release that we have actually signed a long-term PPA with Water Corporation, which will underpin a wind farm, what we call the Marree Wind Farm, close to 500 MW. So that will be developed as well.

Speaker #3: I just want to also Caution that there is a big portfolio , right ? So each of these businesses or these projects , some are committed , some are not .

Speaker #3: And that we we want to , you know , as much as directionally we are there to support the growth and the energy transition of the business as well as of Australia .

Eugene Cheng: We will also be looking at another BESS project, which is the Reeves Plains one. In addition to that, you would have also seen in Alinta's press release that we have actually signed a long-term PPA with Water Corporation, which will underpin a wind farm, what we call the Marree Wind Farm, close to 500 MW. So that will be developed as well. I think from a COD timeline, the Marree Wind Farm probably won't be in the next 12 to 24 months. But essentially, these will be the key projects that we'll be looking at.

Speaker #3: We will be evaluating each one of these projects on a stitch by stitch basis . So that's something that I thought need to be clear about in case , you know , I , I don't want you to be just based on what we're saying here , then start to build all these things into your model with the full CapEx and then with some earnings and so on .

Speaker #3: We , we will go through that in stages . And just like in the Singapore portfolio or elsewhere , we will inform you when milestones are reached , just like , you know , we won the bid for Tavolazzi .

Eugene Cheng: I think from a COD timeline, the Marree Wind Farm probably won't be in the next 12 to 24 months. But essentially, these will be the key projects that we'll be looking at.

Speaker #3: We sign the contract for Tavolazzi . Along the way , we will , we will , we will announce it . Right . So , so this .

Wong Kim Yin: I just want to also caution that Alinta is a big portfolio. So each of these businesses or these projects, some are committed, some are not. We want to, as much as directionally we are there to support the growth and the energy transition of the business as well as of Australia, we will be evaluating each one of these projects on a stage-by-stage basis. So that's something that I thought need to be clear about in case, I don't want you to be just based on what we are saying here, then start to build all these things into your model with the full CapEx and then with some earnings and so on. We will go through that in stages and just like in the Singapore portfolio or elsewhere, we will inform you when the key milestones are reached.

Speaker #3: But I think what Eugene is confirming is these are projects that are in the pipeline , right . And that it's one of the reasons why , when we looked at the investment into Alinta , we know that they have a strong pipeline that we can come in to support .

Speaker #4: Yeah .

Speaker #1: Okay . Then the question that I will ask Jeff's help on is to , in relation in the second half for Atlantis core earnings , how much of those earnings is anchored by long term or retail or commercial contracts versus a basically taking spot volatility in the spot markets ?

Speaker #7: So the short answer is predominantly all secured for the next half . So either through customer contracts , we don't have any major renewals coming up in that period .

Wong Kim Yin: We will go through that in stages and just like in the Singapore portfolio or elsewhere, we will inform you when the key milestones are reached. Just like, we won the bid for Taweelah C, we signed the contract for Taweelah C. Along the way, we will announce it. But I think what Eugene Cheng is confirming, these are projects that are in the pipeline. Right. That is one of the reasons why when we looked at the investment into Alinta, we know that they have a strong pipeline that we can come in to support. Okay, then the question that we will ask Geoff Helpon is in relation in the H2 for Alinta's core earnings. How much of those earnings is anchored by long-term or retail or commercial contracts versus basically taking spot volatility in the spot markets?

Wong Kim Yin: Just like, we won the bid for Taweelah C, we signed the contract for Taweelah C. Along the way, we will announce it. But I think what Eugene Cheng is confirming, these are projects that are in the pipeline.

Speaker #7: So customers are secured away . We continue to receive payments capacity payments for the generation that we have in the West and our portfolio is predominantly hedged for that period as well .

Eugene Cheng: Right. That is one of the reasons why when we looked at the investment into Alinta, we know that they have a strong pipeline that we can come in to support. Okay, then the question that we will ask Geoff Helpon is in relation in the H2 for Alinta's core earnings. How much of those earnings is anchored by long-term or retail or commercial contracts versus basically taking spot volatility in the spot markets?

Speaker #7: So the outlook , I would say from from our perspective , is quite secure .

Speaker #1: Thanks , Jeff .

Speaker #3: And Jeff , if I may , just to clarify , because you can't see the question here , but the question says that , you know , is that are this long term retail commercial contracts .

Speaker #3: And I think the , the nature of the contracts in Australia , in the case , you know , they are none of them are like ten years , right .

Speaker #3: They are all sort of in the three , three year range , two , three years .

Jeff Dimery: The short answer is predominantly all secured for the next half, so either through customer contracts. We do not have any major renewals coming up in that period, so customers are secured away. We continue to receive capacity payments for generation that we have in the west, and our portfolio is predominantly hedged for that period as well. The outlook, I would say, from our perspective, is quite secure.

Speaker #7: 1 to 3 years is 1 to 3 . So the average duration in the book would be approximately two years on average , made up of one , two and three year contracts with the exception .

Speaker #7: Eugene spoke about the PPA with the water Corporation . If we go ahead and that's conditional on us building the Murray Wind farm .

Speaker #7: So if we get to FID on that , the PPA will be for 15 years . So that will be a bit of an outlier , right ?

Speaker #3: So so so for the second half of the year is covered by contracts , right . But these contracts , they are of a two three year tenure .

Eugene Cheng: Thanks, Geoff. Geoff, if I may, just to clarify, because you cannot see the question here, but the question says that are these long-term retail commercial contracts? I think the nature of the contracts in Australia, in the case, none of them are 10 years. They are all sort of in the three-year range, two, three years.

Speaker #3: So just to be clear , so that okay . Thanks , Jeff .

Speaker #4: Thanks , Jeff .

Speaker #3: There are no further questions online . We'll take one last question from the floor . Dory , thanks for your patience

Speaker #5: Thank you . Tori . From the .

Speaker #3: Edge , Singapore , I have two questions . Firstly relates to the loan with the Australian dollar rising . How does it impact financing costs ?

Jeff Dimery: One to three years is-

Eugene Cheng: One to three years.

Jeff Dimery: The average duration in the book would be approximately two years on average, made up of one, two, and three-year contracts. With the exception, Eugene spoke about the PPA with the Water Corporation. If we go ahead, and that is conditional on us building the Marree Wind Farm. If we get to FID on that, the PPA will be for 15 years. So that will be a bit of an outlier.

Speaker #3: Secondly relates to Wilton , UK . I'm sure I understand it is still a very early . You are still doing the proposals or bidding , but of course before you do .

Speaker #3: Decided to pivot . I'm sure you all have calculated what are the returns . Could you share some insight into what are your calculations ?

Speaker #1: I think I will . Your first question is in relation to the the the basically fixed versus floating of the of the of the financing .

Eugene Cheng: Right. So for the H2 of the year, it is covered by contracts. But these contracts, they are of a two, three-year tenure. Just to be clear so that. Thanks, Geoff.

Speaker #1: Right . So when we look at the Alinta , a financing 6.5 billion , you know , close to four of that is really sink dollars .

Ling Xin Jin: There are no further questions online. We will take one last question from the floor. Tawy, thanks for your patience.

Xin Jin: There are no further questions online. We will take one last question from the floor. Tawy, thanks for your patience.

Speaker #1: And then , you know , the remaining is in Australian dollars . So you're right . I think in general , we have seen base rates in Australia rising .

[Analyst] (The Edge Singapore): Thank you. Tawy from The Edge Singapore. Two questions. Firstly relates to the Alinta loan. With the Australian dollar rising, how does it impact financing costs? Secondly, relates to Wilton, UK. I understand it is still very early. You are still doing the proposals or bidding. Before you all decided to pivot, I am sure you all have calculated what are the returns. Could you share some insight into what are your calculations?

Speaker #1: So we , our , our , our inclination is to hedge the Australian dollar base rates so that we don't take , you know , a lot of base rate risk in terms of the Australian dollar funding on the Singapore side , we are taking a more balanced view .

Speaker #1: Right . Because when we look at the Singapore Sora , it's as been fairly benign . So we are basically , you know , looking at our options in relation to , you know , hedging of our Singapore base rate or exposure , you know , given the fact that it is a benign .

Eugene Cheng: I think your first question is in relation to basically fixed versus floating of the Alinta financing, right? When we look at the Alinta financing, SGD 6.5 billion, close to 4 of that is really Sing dollars, and then the remaining is in Australian dollars. So you are right. I think, in general, we have seen base rates in Australia rising. So our inclination is to hedge the Australian dollar base rates so that we do not take a lot of base rate risk in terms of the Australian dollar funding. On the Singapore side, we are taking a more balanced view. Because when we look at the Singapore SORA, it has been fairly benign. So we are basically looking at our options in relation to hedging of our Singapore base rate exposure, given the fact that it is benign.

Speaker #1: So but in general , we are still prefer more fixed and floating . But of course , we will be quite judicious in how we approach , you know , hedging the Singapore dollar portion .

Speaker #1: So that's the , the , the , the question on hedging .

Speaker #4: Yeah .

Speaker #3: Wilton returns

Speaker #1: Because the it is an .

Speaker #3: Existing site .

Speaker #1: And it is .

Speaker #3: Existing assets that we're leveraging on . Suffice to say that the returns will be very high . Right . Because you are the book value written down is already written down to very low levels , right ?

Speaker #3: In terms of new investment going into it , it will obviously have to have to

Eugene Cheng: On the Singapore side, we are taking a more balanced view. Because when we look at the Singapore SORA, it has been fairly benign. So we are basically looking at our options in relation to hedging of our Singapore base rate exposure, given the fact that it is benign. In general, we still prefer more fixed than floating. But of course, we will be quite judicious in how we approach hedging the Singapore dollar portion. So that is the question on hedging.

Speaker #1: Have to make sense before we would put in any new investments . But when we talk about 280MW of , of powered land that is ready by 2028 .

Speaker #1: It is through the transmission grid and the substation that is already there . So with the chemical customer having vacated the land that transmission capacity is still there , right ?

Eugene Cheng: In general, we still prefer more fixed than floating. But of course, we will be quite judicious in how we approach hedging the Singapore dollar portion. So that is the question on hedging.

Speaker #1: So not much additional investment has to go in , right ? So what we're doing is that we're selling the land together with the transmission capacity .

Jeff Dimery: Yeah.

Eugene Cheng: Wilton returns, because it is an existing site and it is existing assets that we are leveraging on, suffice to say that the returns will be very high. Because your book value written down is already written down to very low levels. In terms of new investment going into it will obviously have to make sense before we will put in any new investments. But when we talk about 280 megawatts of powered land that is ready by 2028, it is through the transmission grid and the substation that is already there. So with the chemical customer having vacated the land, the transmission capacity is still there. So not much additional investment has to go in. So what we are doing is that we are selling the land together with the transmission capacity if the customer comes along and offers us the right terms.

Wong Kim Yin: Wilton returns, because it is an existing site and it is existing assets that we are leveraging on, suffice to say that the returns will be very high. Because your book value written down is already written down to very low levels. In terms of new investment going into it will obviously have to make sense before we will put in any new investments. But when we talk about 280 megawatts of powered land that is ready by 2028, it is through the transmission grid and the substation that is already there. So with the chemical customer having vacated the land, the transmission capacity is still there. So not much additional investment has to go in. So what we are doing is that we are selling the land together with the transmission capacity if the customer comes along and offers us the right terms.

Speaker #1: If the customer comes along and , and offers us the right terms , right ? So in that type of scenario , the because of the lower investment going in , in the front end , the returns which , which should be very , very high because the denominator in your return calculation is more .

Speaker #1: Now , having said that , this would be the first phase . And we obviously have the ambition to go further beyond the phase one .

Speaker #1: Right . And and if the right customer comes along , as I say , then the phase two , in order to serve the customer needs , we would need to involve new investments into new power plants and so on and so forth .

Speaker #1: But that is a is a happy situation , frankly . And we are we are taking it a phase at a time . So right now , phase one is , is shovel ready borrowing Eugene's phrase , shovel ready .

Speaker #1: Howard land very rare in the UK and we will take advantage of that in order to secure a longer term future for the site If you're not taking further questions right , I think it's a bit late .

Eugene Cheng: So in that type of scenario, because of the lower investment going in the front end, the returns should be very, very high because the denominator in your return calculation is small. Now, having said that, this will be the first phase, and we obviously have the ambition to go further beyond the phase 1. If the right customer comes along, as I say, then the phase 2, in order to serve the customer need, we would need to involve new investments into new power plants and so on and so forth. But that is a happy situation, frankly. We are taking it a phase at a time. So right now, phase 1 is shovel-ready, borrowing Eugene's phrase. Shovel-ready powered land, very rare in the UK, and we will take advantage of that in order to secure a longer-term future for the site.

Wong Kim Yin: So in that type of scenario, because of the lower investment going in the front end, the returns should be very, very high because the denominator in your return calculation is small. Now, having said that, this will be the first phase, and we obviously have the ambition to go further beyond the phase 1. If the right customer comes along, as I say, then the phase 2, in order to serve the customer need, we would need to involve new investments into new power plants and so on and so forth. But that is a happy situation, frankly. We are taking it a phase at a time. So right now, phase 1 is shovel-ready, borrowing Eugene's phrase. Shovel-ready powered land, very rare in the UK, and we will take advantage of that in order to secure a longer-term future for the site. You are not taking further questions, right?

Speaker #1: Thank you for your patience . I in in I before you go , if you just have to remember 1 or 2 things coming out from this session , I think for us at least my own lens is that the highlight for this , this season is actually first , the Alinta , right ?

Speaker #1: The completion smoothly of linter and then having seen it contributing to the group's earnings pace . And that the second thing is that the second half we are we see all the catalysts and all the reasons why we are very confident about the full year being being good .

Speaker #1: Right . So the second half will be much better than the first half . So that's something that . We describe all the things that that we mentioned to you just now .

Speaker #1: And , and , and that anchors the confidence that , you know , we will continue with our commitment to sustain the growth in our dividend , even while we deleverage .

Wong Kim Yin: You are not taking further questions, right?

Wong Kim Yin: No more.

Xin Jin: No more.

Wong Kim Yin: I think it is very late. Thank you for your patience. Before you go, if you just have to remember one or two things coming out from this session. I think for us, at least my own lens, is that the highlight for this season is actually first Alinta. The completion smoothly for Alinta, and then having seen it contributing to the group's earnings base. The second thing is that the H2, we see all the catalysts and all the reasons why we are very confident about the full year being good. So the H2 will be much better than the H1. So that is something that we described all the things that we mentioned to you just now. That anchors the confidence that we will continue with our commitment to sustain the growth in our dividend, even while we deleverage.

Speaker #1: Right ? So Alinta second half as well as sustained dividend growth for deleveraging . So those are the few things that I would offer as a as a takeaway certainly is something that I would like you to take away from this session .

Speaker #1: So thank you very much . Thanks . Thank you . This brings us to the end of today's presentation . Thank you very much for joining us again .

Wong Kim Yin: The second thing is that the H2, we see all the catalysts and all the reasons why we are very confident about the full year being good. So the H2 will be much better than the H1. So that is something that we described all the things that we mentioned to you just now. That anchors the confidence that we will continue with our commitment to sustain the growth in our dividend, even while we deleverage. Alinta, H2, as well as sustained dividend growth for deleveraging. Those are the few things that I would offer as the takeaway. Certainly is something that I would like you to take away from this session. Thank you very much.

Wong Kim Yin: Alinta, H2, as well as sustained dividend growth for deleveraging. Those are the few things that I would offer as the takeaway. Certainly is something that I would like you to take away from this session. Thank you very much.

Ling Xin Jin: Thank you. This brings us to the end of today's presentation. Thank you very much for joining us again, and we wish you a pleasant day ahead.

Xin Jin: Thank you. This brings us to the end of today's presentation. Thank you very much for joining us again, and we wish you a pleasant day ahead.

Eugene Cheng: Are you serving lunch? There is some buffet out there if you are hungry.

Wong Kim Yin: Are you serving lunch? There is some buffet out there if you are hungry.

Browse all earnings call transcripts

Half Year 2026 Sembcorp Industries Ltd Earnings Call

Request TrialDemo

Sembcorp

Earnings