I’ve written previouslyon Sembcorp Industries Limited (SGX: U96) and how they’ve been able to turn around their business.
The owner of power-generating assets, which was spun out from Sembcorp Marine Ltd (SGX: S51), is now able to focus solely on shifting its portfolio towards renewable energy.
While only 25% of its net profit in the first half of 2022 came from renewable/sustainable solutions, management aims to hike that proportion to 70% by 2025.
Not only that but it wants to increase its renewable-generating capacity from the current 5.4 gigawatts (GW) to 10 GW by 2025.
It has backed up its plan with actions. The company recently sold two coal-fired power plants that it owns in India.
Clearly, management is focused on building out its renewables base and reinvesting more capital into clean energy projects given the heightened demand in Asia.
While the company’s share price is up strongly in 2022, it actually is a continuation of sold performance. In fact, over the past year Sembcorp Industries’ share price is up just over 70%.
Attached to Sembcorp Industries is scarcity value given that it’s the only pure-play renewable energy generator listed in Singapore. The next decade or so looks bright for this renewable energy company.
Next up is large Chinese shipbuilding company Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6).
While the company saw its shares trade rangebound over the past decade – given shipping oversupply – it’s now benefitting from a reversal.
The firm’s first-half 2022 earnings came in strong. Revenue of RMB 9.74 billion was up 70% year-on-year while its annualised return on equity (ROE) was 14% in the first half. That was up from 9% in the first half of 2021.
Yangzijiang managed to deliver 35 vessels in the first six months of this year, compared to 23 vessels delivered for the first half of 2021.
Its orderbook has grown substantially during the past 18 months or so. While it had an outstanding order book of 83 vessels as of the end of 2020, year-to-date Yangzijiang has a total outstanding orderbook of 134 vessels worth US$8.13 billion.
Most of these new orders have been containerships and bulk carriers. No doubt that has come on the back of supply chain snarls as large clients look to increase shipping supply.
Looking to Singapore for calmer waters
While both Sembcorp Industries and Yangzijiang Shipbuilding have been outstanding performers so far in 2022, this of course does not guarantee that they’ll continue to be.
It’s important to remember that investors need to monitor companies and their strategies to ensure that they align with your risk profile before investing.
However, with Singapore’s stock market providing us with solid and mature businesses, it’s good to know that both Sembcorp Industries and Yangzijiang Shipbuilding do also pay dividends.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Sembcorp Industries Limited.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.