Sembcorp Industries Ltd (U96) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to Sembcorp Industries Full Year 2024 Results Presentation. A warm welcome to viewers tuning in via the webcast. I'm Xin Jin from Group Corporate Communications and Investor Relations. [Operator Instructions] Thank you. The members of the panel for today's results presentation are Group CEO, Mr. Wong Kim Yin; and Group CFO, Mr. Eugene Cheng. I will now hand over the time to Kim Yin to begin the presentation. Kin Yin, please.

Good morning, and welcome to Sembcorp Industries Full Year 2024 Results Briefing. I must first apologize for my attire, everybody is wearing a jacket, but with the screen behind me, it's just too hot, so you have to put up with me. Otherwise, I wouldn't be as clear as I could be. So let's get into it. The group delivered a very resilient performance in 2024. Turnover was $6.4 billion, EBITDA $1.7 billion, adjusted EBITDA $2.1 billion. Net profit before exceptional items, $1.02 billion, surpassing the $1 billion mark for the second consecutive year. Now this is despite our Singapore coal generation plant being shut down for close to 2 months for major maintenance and also a 34% decline in the Singapore wholesale power market price. EPS, earnings before -- earnings per share before EI was $0.572. Group return on equity before EI was 20.5%. This year, we are proposing a final dividend of $0.17, bringing total dividend for the year to $0.23 per share. This is a 77% increase from the $0.13 in 2023 and implying a 40% payout ratio compared to 23% last year. The dividend yield of 3.9% is based on the closing price of $5.88 per share yesterday. In less than 4 years since our portfolio transformation, we have strengthened our key business segments, which have delivered resilient earnings and robust cash flows to the group. Our net profit before EI has more than tripled since 2020 with strong earnings predictability, delivering a CAGR of 36%. This increase in dividend reflects our confidence in the company's future performance and our ability to generate sustainable returns. Let me take you through the key highlights of each of the business segments. Under gas and related services, during the year, we continued to proactively secure long-term power purchase agreements for our Singapore portfolio, enhancing earnings visibility. So as of end of 2024, 99% of our Singapore's gas-fired generation capacity is contracted. We now have the largest portfolio of long-term PPAs with high-quality customers, including Micron, Singtel, ST. Telemedia, Equinix, GSK, for example. We are also a leading power provider to data centers, supplying over 1/3 of the industry's energy needs. This contracted portfolio has provided earnings resilience as validated by the strong contribution from this segment despite the 34% decline in wholesale electricity price last year. In November last year, we completed the acquisition of a 30% interest in Senoko Energy from ANGI for $96 million. Senoko Energy is one of the largest electricity suppliers in Singapore, operating around 2.6 gigawatts of gas-fired generation capacity. Meanwhile, our 600-megawatt hydrogen-ready gas-fired power plant is on track for completion in 2026. With natural gas remaining critical for national energy security, we are strengthening our ability to meet Singapore's growing power needs while supporting also the country's energy transition. In the Renewables segment, we have added 4.1 gigawatts of capacity to our portfolio during the year bringing total group capacity to 17 gigawatts. Tapping on our development expertise, we capitalized on the strong momentum in India's greenfield tenders, securing over 2 gigawatts of hybrid bids, including our first battery energy storage and solar project in the market. We have also successfully entered new markets. In Oman, Middle East, we delivered a 500-megawatt solar project more than 4 months ahead of its scheduled commercial operations date. We have completed our first utility-scale integrated solar and energy storage project in Nusantara, Indonesia. And most recently, we marked our entry into the Philippines with a proposed acquisition of a 96-megawatt solar portfolio in January. We remain focused on achieving our target of 25 gigawatts gross installed renewables capacity by 2028. This chart tracks our growth in various markets over the past 4 years. We have expanded our renewables portfolio from 3 gigawatts to 17 gigawatts through more than 30 deals, maintaining strict discipline while avoiding mega acquisition risk. Our portfolio spans across growing Asian markets, enabling us to shift our focus between geographies based on market conditions. This can be shown through our recent successes in securing projects in India and other countries, even while the Chinese market has slowed. Our ability to execute differentiated strategy across different markets is key. For instance, our expertise in developing, constructing and operating wind projects has given us a winning edge in recent hybrid tenders, achieving higher tariffs compared to pure solar and wind projects in India. The markets that we operate in offer plenty of opportunities for growth, and we will remain disciplined in assessing new investments. The Integrated Urban Solutions segment delivered strong earnings growth following a turnaround in performance from the urban business. Higher land sales in Vietnam and Indonesia were the main drivers. Building on the momentum, we further strengthened our Vietnam-Singapore Industrial Park VSIP portfolio to 18 industrial parks now with the addition of 3 new investment licenses. We also expanded our presence to Batam, Indonesia through a joint venture with Panbil Group, a prominent player in the industrial and hospitality sectors. During the year, we acquired land in multiple locations in Vietnam to develop industrial properties for lease, and this is in line with our refreshed strategy. This initiative expands our offering of high-quality spaces and strengthens our recurring income stream. Our occupancy rates for completed industrial properties rose to 76%, up from 47% in 2023. We continue to review our portfolio and sharpen our focus. In November 2024, we announced the sale of Sembcorp Environment for a consideration of $405 million, which represents a 43% premium over its book value. We expect to record a gain of no less than $100 million for the sale. In summary, we are pleased with our performance, and we will continue to focus on execution. The 3 growth engines, gas and related services, renewables and integrated urban solutions will drive Sembcorp's strategic plan towards 2028 and beyond. Eugene, please take us through the financial review.

Thank you, Kim Yin. Kim Yin has given the broad highlights in relation to our business development, I'll just take us through in a greater detail on how we have performed financially in FY 2024 over FY 2023. Now this slide details our headline performance. When we look at the turnover, we saw a 9% decrease and some of this has already been guided previously. I think in FY 2023, it was quite clear that in the first half of FY 2023, we did benefit from higher pool spikes and pool prices prior to putting in place the TPC, right, which is a temporary price caps as instituted by the EMA. In addition, we've also guided the market previously that we would have a major inspection for our Sakra units, which took place quite successfully crossing Q1 and Q2 this year. And we also saw general lower power prices in U.K. So essentially, these are some of the factors that contributed to the decline in the turnover. But however, as Kim Yin has highlighted earlier on, the strength of our portfolio and the resiliency in our earnings really came through, right, in the long-term contracts that we have renewables being long-term contracted on fixed rates in general. And even for our gas business in Singapore, we have increased our contracted positions, particularly in the form of dollar -- fixed dollar spark spreads. As a result, our EBITDA is resilient in spite of those guidance and factors mentioned earlier on, and we turned in at $1.74 billion, which represents only a 3% decline year-on-year. In terms of our share of results from associates and JVs, that has increased 20% from $264 million to $370 million. This is driven a lot in part, number one, by projects commissioning in the renewables JVs, but also strong performance in urban as well. We saw strong resurgence of land sales in VSIP in Vietnam as well as across in Indonesia. So all of that brought our adjusted EBITDA, which is essentially flat from last year. And our net profit before exceptional items turning in $1,019 million, which is slightly higher than $1,018 million of last year. I just want to highlight the net loss from discontinued operations. We did register a $9 million loss, and this is largely from the perspective of the sale of Songzao, which took place in December last year. And this $9 million is a reflection of the flushing out of the foreign currency translation reserve into the P&L, which is typically from an accounting perspective, what we need to do as a result of sales. That is similar to the situation in FY 2023, the loss of $78 million, which came through as a result of the sale of our SEIL assets, which is also driven largely by the flushing out of the foreign currency translation reserve in relation to that sale. So from an ROE perspective, as Kim Yin has pointed out, we turned in 20.5% relative to 23.8% last year. I think just in relation to this 20.5%, there are a couple of considerations. Firstly, we did have the MI effect in the gas and related services. And then we did take some provisions against some of our China receivables given the environment. So normalized for those and also approximately $0.5 billion of CapEx that was spent in FY 2024 for projects that has not yet contributed to cash flows, our normalized ROE would have increased by another 100 basis points. So if you go to the next slide, I wouldn't dwell too much on the group turnover because I will go into a little more detail talking about group net profit. If we move to the next slide. So from a net profit perspective, our gas and related services returned $727 million for FY 2024 represent an approximately 10% decline from $809 million last year. I think for the Gas and Related Services segment, the outcome we have always guided the market that in FY 2023, there was approximately $60 million benefit from a higher pool price spikes achieved in the first half of 2023 that will no longer be possible given the institution of the temporary price gaps and also given the fact that we have strongly contracted our portfolio since the second half of FY 2023 going to FY 2024. And also in the first half of 2024, we had conducted a major inspection for our Sakra units. I've previously guided that given our best estimation at the beginning of FY 2024, we expected the impact to be approximately $60 million to $70 million, but that has -- we have reduced that to a much smaller impact. The gas and related services also benefited from recognition of income from our Senoko acquisition, which completed towards the middle of November of 2024. All in, we turned in $727 million, which will be a very stable gauge of our earnings capability going forward. Now the Renewables segment turned in $183 million, which represents a 9% decline relative to $200 million in FY 2023. Now there will be more details detailing the Renewables segment in the slides following this group net profit discussion. But in general, while we saw new projects being commissioned, right, across some in China, in Singapore, some in India and also the very successful commissioning of Manah, a couple of things to note. Firstly, many of these new projects were commissioned more towards the second half of the year, so they did not contribute on a full year basis. Secondly, from a project perspective, we did see higher curtailment for China across the year. And we did experience slightly lower wind speeds for our India wind assets in the second half of the year. And I also mentioned earlier on, we did take approximately $19 million post-tax and post-MI provisions against our Chinese receivables given the environment. So in relation to the normalization of what the net profit ought to have been and also the ROEs I'll discuss in the subsequent slides. Now Integrated Urban Solutions, as mentioned earlier on, strong performance, $169 million relative to $121 million, a 40% increase, driven largely by the strong performance in the urban business. But we also saw an uplift in performance in our waste business as well. In FY 2024, we saw higher availabilities, particularly in our energy from waste plant and where availabilities were in excess of 80%. Of course, the waste business, as mentioned by Kim Yin, is now subject to a sale and is awaiting completion. The Water business in the Integrated Urban Solutions segment maintained a very stable performance relative to last year. Now in terms of other businesses, which is the other call out, we saw a 23% increase. Now just for our perspective, the other business segment comprises our Singapore Mint, which is probably the smaller contribution in the segment, while the larger contributor is really our Sembcorp Specialized Construction, which focus on specialized construction for certain government projects. Now we saw a strong uptick in the order book. And as a result, the execution of the order book brought through the earnings growth, which just saw an increase in the earnings from this segment from $31 million to $38 million this year. In terms of corporate cost, we were able to keep it down, a lot of it driven in part by managing our interest cost. So in spite of deploying from a net debt perspective, about $1.3 billion of increased debt, we were able to take advantage of the normalizing of the interest yield curves and interest base rates coming down in the latter half of last year, right, and be able to put out longer-term financing capturing those interest rates, hence, allowing us to control our interest cost. In terms of our other corporate costs, we benefited from onetime dividend income that brought us down from 92 to 84. Adjusting for the dividend income, our corporate costs will have remained flat, which is a good result given the fact that we are scaling up quite quickly. In terms of the DPN income, right, from an income perspective, which is really the interest that is charged, that has come down from $179 million in FY 2023 to $159 million in FY 2024, less so from an interest rate perspective, but more so because the principal has been paid down faster than expected, which is a positive thing, which I'll touch a little bit on our cash collection via the DPN later on. And we did see an FX reval gain, which is a noncash end of the year balance sheet revaluation gain of $10 million this year relative to a loss of $46 million last year. So all of that brought about a net profit before exceptional items of $1,019 million relative to $1,018 million last year. I will not say any more about the net loss from discontinued operations because I've highlighted that. Now I just want to jump 2 slides down to the group ROE, right, where we look at the comparisons of the ROE. Now the Gas and Related Services ROE is 32.2% relative to 40.7% last year, right? Now if we normalize again for the MI impact and also continued deployment of capital for building up CCP IV, which is currently not contributing to earnings, that will probably have seen a 300 basis points uplift in terms of ROE in the Gas and Related Services segment. The Renewables segment ROE stands at 8% relative to 11%. However, there were certain considerations, which I'll talk into greater detail in the subsequent slides. And the Integrated Urban Solutions segment ROE saw an improvement from 6.7% to 8.5%, driven by the strong performance generally across the different asset classes within the [ IUS. ] So I'll talk a little bit about the renewables portfolio and also the ROEs and also some of the market developments that we are seeing in the market. So firstly, from an ROE perspective, as mentioned earlier on, we are doing 8% this year, purely from a realized results perspective relative to 11% last year. However, right, the lower ROE that we see this year is due to 3 key reasons, right? Number one, the projects that were COD in 2024 came in largely in the second half of the year. We had 3.7 gigawatts of renewables capacity installed during the year, but about 3.1 gigawatts of that actually came in, in the second half of the year. So if we assume a full year contribution from the projects on a normalized basis, that would be probably a better representation of the ROE. We also have CapEx spent on projects that are currently under construction that are not -- that have seen a capital deployment that are not contributing EBITDA. So if you normalize for that, we probably would see an uplift in ROEs as well. And as mentioned earlier on, for China, we did take a provision for certain receivables that amounts to [ $19 ] million on a post-tax, post minority interest standpoint. You would have seen that in SGXNet. Now if we normalize for these 3 elements, our normalized ROE will stand about 10.8% relative to about 11.7%. Now the 90 bps decline in ROE largely could be seen in the light of some higher curtailment in China and also lower wind resource in India. If we move on to the next slide. For the China renewables portfolio, just to help us understand the context of the China renewables portfolio, currently, we have a gross capacity of 8.5 gigawatts, right? We only have about 167 megawatts that is currently under construction and the total attributable capacity of China to Sembcorp is 4 gigawatts. From an earnings contribution standpoint, the China Renewables earnings accounts for approximately 10% of the group net profit before EI in FY 2024. Now you have heard in the half year announcement that we did talk a little bit about the curtailment situation, right? When we look at the second half of this year, while in Q3, we did see curtailment come down slightly, but on a full half basis, in Q4, the curtailment rates went up again. And so across 2024, curtailment averaged about 9% or so for solar and about 8% for wind. Now the reason for this curtailment as we look at it from a market perspective, really is the fact that in the past few years, we did see renewables installation grew faster at least in the near-term recent past relative to power demand. Renewables installation grew 163% in the past 5 years and averaging between 34% to 39% in the last 2 years, while power demand grew about 31% cumulatively in the same period and averaging about a 7% growth per annum, right, across 2023 and 2024. So as a result, that probably contributed to the slightly elevated or elevated curtailment rate in 2024. However, we do expect the curtailment to alleviate, right? We do expect the speed in which the COD of new projects potentially to be slowing slightly. And we also do expect there to be accelerated investments to strengthen the grid. I mean, in general, the China state grid and the Southern grid have also announced that they will be investing a record over JPY 825 billion in the country's power grid in 2025 alone, and that's up from JPY 781 billion in 2024. With these upgrades, we do expect the curtailment pressures to alleviate over time. Now also another point to note is that when we look at the key regions in which the curtailments were more elevated, it tend to be in the Northwestern region in areas such as Qinghai, Gansu and Xinjiang. And these higher curtailment rates have impacted more our JV portfolios. When we look at the curtailment in relation to our controlled -- portfolio, curtailment rates were actually a lot more lower, around 3%. So that is to give you a sense of the market development in relation to that. I think on the next slide is just a quick illustration of some of the China's renewables pricing reform that we have seen recently, right? In general, projects that are COD after June 2025, there is an expectation for all of the generation to be traded into the power market from COD. Of course, from a pricing perspective, this will be based on the market pricing. And also, there will be -- there are policies that will offer contract for differences to allow contracting of the capacity. I think in relation to Sembcorp's portfolio, right, that we do not expect there to be a lot of significant impact to our existing portfolio. Our existing portfolio that have commissioned and are operational are largely based on the FIT regime where the blended tariff is benchmarked against the on-grid coal tariff. There are some capacity that are subject to a market-based pricing, but currently, that is not that significant in our existing portfolio. And also, when we talk about market-based pricing, it isn't exactly us putting that into a spot trading market. We tend to seek out a mid- to long-term contracts to cover that off as well. So as a result, with the new policies that are put in place, our operational assets, we do not expect that to be significantly impacted. Also in our current pipeline, about only 167 megawatts of capacity, right, is expected to be commissioned after June of 2025. So actually, right now, we do note that at the provincial level, the implementation and execution of the policy is not exactly clear. We hope that, that will come through a later part in 2025. So we will continue to monitor the developments and give the market significant updates accordingly. But more importantly is to note that we will continue to maintain IRR discipline for our capital deployment, in terms of IRRs and also in the project execution, where we will ensure that project location selections will meet the criteria of load centers demand and also being able to meet merit orders. And more importantly, typically, when we are -- if we are acquiring projects, we will ensure, as we have always done so in the past, we will structure those projects such that there will be protection mechanisms for any unexpected changes or movements or developments in the market. Now if we move on to the next slide, just to touch on a little bit for the India renewables portfolio. As I mentioned earlier on, there are some impact in the second half of '24 because we did see lower year-on-year wind speed. Now when we analyze across the wind speed effect, the more material decline wind speed actually took place in the region of Gujarat, where currently a bigger portion, right, of our wind assets are currently lie. Now going forward, we are watching the development of the wind speeds through our resource analytics very closely. But more importantly is as we build out our portfolio and even within our pipeline currently, we do see a natural diversification in terms of resource and also locations of where our plants would reside in as we build out the portfolio. Now if you look at our current portfolio of 5.8 gigawatts, of course, about 2.5 to 2.8 gigawatts is currently operational. By the time all of them is built out, right, we will expect 48% of that capacity to be contributed by solar, 47% by wind and about 5% from energy storage. So our exposure to wind will be meaningfully mitigated as the pipeline is developed. Also more importantly is that if you look at many of our recent wins, which are very much hybrid projects, we have seen the tariffs increase meaningfully. From the earlier days, we are averaging anywhere from INR 250 to INR 290 per kilowatt hour. And currently, we are winning projects closer to the INR 330 to INR 350 per kilowatt hour range. So we are also seeing an uplift in terms of the tariffs that are winning for the more complex projects, of which Sembcorp does have the technical capabilities to run well. Going forward, we do expect the government to continue to mandate the inclusion of battery storage in our solar and wind power projects, starting with about 10% of plants capacity. That will play to our strength, particularly with our technical capability in integrating both wind resource and storage to give a more stable and certain generation. So lastly, overall picture of our diversified renewables portfolio, right, across several -- many different regions. We have 17 gigawatts. When we look at the addressable renewables growth across all the different markets that we are currently in, we see huge opportunity, right? We see almost 1,650 gigawatts of new expected new opportunities to be deployed over the next 4 years or so to 2028. Now more importantly on this slide is that we have quite successfully in 2024, established ourselves in the new markets for renewables. You have seen that we have very successfully commissioned our Oman plant, right, 6 months ahead of the COD, right? And also, we have entered Indonesia with a 50-megawatt solar project and accompanied by storage. And most recently, we have finally entered the Philippines market. And all of this represent more growth opportunities for us going forward as we execute our renewables growth strategy. So quickly going through the rest of the presentation. From a group capital expenditure and investment standpoint, for '24, we have invested about $2 billion in total from a CapEx as well as equity investments. More than -- slightly over 70% of that is into renewables, which is simply mirror the capital allocation that I've guided us previously, right? So that is not a surprise. Now if you move to the next slide on our group free cash flows. So we continue to generate strong FCF, right? Our free cash flow for FY 2024 stand at about $1.8 billion compared to about close to $2 billion last year. So as I mentioned, we are very convicted about the strength of our contracted cash flows, and it remains strong in FY 2024. Now before we move on from the slide, Jin, if you go back, I just want to point out the DPN receipts line. So for FY 2024, we have collected $404 million in interest and principal. And together with FY 2023, we have collected close to $770 million, which represents close to 40% of the $2 billion book value of the DPN at the point in time when we completed the sale. So we continue to monitor strong cash flows coming in from the DPN receipts, which will contribute to the cash flows for the purpose of funding growth. From a group borrowings perspective, we closed the year with net debt at $7.8 billion, which is approximately a $1.3 billion increase over $6.5 billion last year, less than our total investment and CapEx spending because we were able to utilize cash flows for the perspective of that. Now our net debt to adjusted EBITDA, which is the very closely watched leverage ratio for us as a group, elevated slightly from 3.2x to 3.8x. But again, to highlight, we have deployed about $0.5 billion to $550 million of CapEx for project that are still currently under construction and are not contributing cash flows. So if we adjust for those capital that we are currently carrying, net debt to adjusted EBITDA is around the 3.5x range, which is very much more in line with our execution and growth trajectory. In terms of our group debt profile, from a hedging standpoint, we remain very comfortable with more than 80% of our debt hedged. And from a weighted average cost of debt, maintaining fairly stable at 4.6%, while we have had the opportunity to extend our weighted average debt maturity, I think we benefited from a couple of things last year, right? We were able to tap the bond markets having a 12-year green bond at 3.65%. So a very strong pricing. We were also able to extend some of our bank-related loans from the typical 5 years to 7 to 8 years, which has signified the growing strength confidence of our financiers in our credit and also the strength of our cash flow generation that we've built in our portfolios. Now together with the fixed ratio and also the extension of the debt maturity, we were able to keep our interest costs at 4.6%, which is just only a barely 10 bps increase from 4.5%, which is reflective of the very strong capital access for us in 2024, and we expect that to continue going forward. In terms of group liquidity, right, I think the key element is to focus on our committed unutilized committed facilities in 2024 and also our available cash. Currently, that stands at a very comfortable $3.4 billion of available on-demand type liquidity. So to round up the financial presentation. This is essentially the outlook. I think across the 3 key segments, the gas and Related Services segment, the Renewables segment and your integrated Urban Solutions segment. I just want us to associate these segments to 3 key words as we go into 2024. So for the Gas and Related Services segment, we relate that to the word strong, right? A very strong resilient portfolio that has been built through contracting as well as the Senoko acquisition, putting us in a good position going into 2025. For the Renewables segment, we associated that with growth. It is expected to grow, driven by a full year contribution of the assets that have been acquired and COD in 2024 as well as the ongoing execution of our pipelines. And we do expect our Integrated Urban Solutions segment to at least be stable. Now of course, we do want to highlight that, as Kim Yin has pointed out, we have -- are waiting the completion of the sale of Sembcorp Environment, which is our waste business. And that is expected to generate a gain on the disposal well, no less than SGD 100 million. So with that, I just want to end my presentation, and I'll just pass this time back to Xin.

Thank you very much, Eugene. We now move into our next segment on Sembcorp's reorganization and the appointment of President and CEO for key business lines. May I now invite Mr. Koh Chiap Khiong, Mr. Alex Tan and Mr. Vipul Tuli to join Eugene and Kim Yin at the table, please? I will now hand the time over to Kim Yin, who will share more details on the reorganization.

Thank you, Jin. Just want to take a little bit of your time to share with you the changes that we're making within the team within Sembcorp, right? Because then that will hopefully give you a better idea as to moving forward, what to expect how we're going to run this company? Who are the people running this company other than Eugene and myself? We have a very solid team behind us doing this? Now without delivering -- this just shows the track record in the last 4 years or 5 -- sorry more than 4 years since I joined this company, we have shown respectable, I would say, growth in terms of profits, in terms of our shift into renewables and green energy in terms of delivering shareholders' returns. And in the meantime, we were able to crank down on our carbon intensity. So what makes moving forward, right? We believe we are in a very good position to write some of this global transition, energy transition being one and also the industrial transition, let me explain, right? So the global energy landscape continues to be evolving as we all know. Natural gas continues to remain fundamental to Singapore's energy security well into the next decade, right? And the energy transition globally will continue to rely heavily on natural gas, right? The intermittency associated with renewables is beginning to bite in many markets that we can see, right? So even in a place like China where there's such a strong grid, we start to see some curtailment because the renewable capacity has run ahead of the grid developments. Of course, you always believe that they're going to catch up with the grid, but you can see it by thing. And you can see that battery energy storage solution is becoming increasingly important. But in the meantime, demand for stable, reliable power continues, right? So AI data centers, these are all energy gases, but they cannot operate on start-stop depending on whether or not the sun is up or the wind is blowing. So gas will continue to remain very important, and very critical, right? So while natural gas continues to be a very important transition fuel well into the next decade, if not the following renewables growth, we do expect to continue, right? Because this will help economies to decarbonize on the one hand, to reduce dependency on conventional sources and in many cases, to keep up with competition, right? There is still -- the capital markets are still expecting businesses and economies to decarbonize. We are also entering a phase whereby global industries are driven to adjust or transform because of technology, because of geopolitics and of course, sustainability. Things like AI robotics, quantum computing, just some examples of the technology that is impacting industry. Factories are relocating and supply chains are realigning. Sembcorp is in the middle of all this. We are very well positioned to ride this, what I would call, a once-in-a-generation global shifts. Our 3 lines of businesses, gas and related services renewables and integrated urban solutions fit squarely into these industries, and we are also in the right places. In the meantime, we have built up the critical mass in each of the businesses and also along with it, capabilities that will enable us to grow, right, as demonstrated in the last 4 years. So we have already reported our financials with industry segments. This season, we are organizing ourselves along with the 3 segments. So I asked the key team members today to join Eugene and me at this panel to introduce them to introduce them to you. We are asking each one of them to head up a key piece of our businesses, right? If I may, I want to introduce Chiap Khiong. He's appointed the President and CEO of Gas and Related Services. So in addition to its portfolio in Singapore, Chuck, we call him, Chuck, will lead Sembcorp's gas business globally. He will also be focused on managing our energy transition portfolio in Singapore, including solar, energy imports and low carbon solutions, right? You should be familiar with Chuck. He used to be CFO, those of you who have followed us for a long time. So we now have the President and CEO, who is a very experienced veteran of the business, and he has also, over the last few years, you can see delivered the very resilient business that is underpinning our growth and also the very strong dividend that we have announced today, all right? So Chiap Khiong -- and later, we'll ask him to talk a little bit about his ambition and how he's going to drive growth in this segment. Next is Alex on my left. Alex Tan will take on the role of President and CEO of Renewables East, where he will drive our renewables business in Southeast Asia in addition to his China portfolio. Over the past 2 years, Alex has built up the China renewables portfolio through strategic partnerships. Similarly, we will look at how we can grow our Southeast Asia renewables business through partnerships while continuing to leverage on our capabilities. Vipul to the -- to my far left, he is President and CEO, Renewables West. Vipul will oversee our renewables business in India as well as the Middle East. Last year, we successfully executed the completion of our first solar plant in Oman, more than 4 months ahead of schedule. And this is to the credit of Vipul and of course, the team in Oman who has been running the Salalah Independent Power and Water Plants. The Salalah IWPP will continue to be under Vipul's coverage for a transition period, while we build up the renewables team in the Middle East. In addition, he will front the drive towards the group's global hydrogen ambition. He has been doing it for a couple of years now. So -- but he will continue to carry the responsibility. And at the same time, to oversee the rejuvenation of our U.K. operations. So people look after things that are happening on the west side. Last but not least, Eugene, he is -- in addition to his responsibility as Group CFO, he's taking on the additional responsibility as President and CEO of Integrated Urban Solutions. He will oversee our Urban and Water businesses. We are hoping that with the turnaround that we experienced in 2024, Eugene will be able to grow this business well beyond its current status and, of course, its potential. Here, I want to also mention that while we have appointed President and CEO for each of the lines of businesses to lead the growth ambition, the existing structures underneath in the underlying business remain, right? For instance, Ark Boon, who was appointed CEO of Urban in 2023 -- late 2023, he has presided over the turnaround, as we mentioned. So he will continue to be CEO of Urban, and he will report to Eugene. And likewise, Nithya, who is CEO of our India Renewables business, will report to Vipul. He will continue to be CEO of the Renewables business. And so the idea of having president CEOs that aligns our -- with our business lines is so that then each of these discrete business lines and now have a strong leader who will help build up the ambition and the strategy towards 2028 and beyond. You might ask, hey, look, so after this change, are we going to revise our targets? Not yet. Give them a little bit of time. Each one of them will tell you the vision as to how they see the lines of businesses when they grow up, right? We are still growing up. We see ourselves in each of these lines of businesses. Maybe you want to call them teenagers, right? We are still not the biggest player in gas. We are not the biggest player in renewables. We're probably teenagers, but we are very aggressive and fast teenagers and they will be led by these proven leaders, and they will -- let me hand over to each one of you -- of them to tell you a little bit about the ambition and how they think they could lead us too, right, if I may, Chuck?

Thank you, Kim Yin. Good morning, everyone. Good to see everyone. Yes, the teenager was to grow very fast, and our ambition for gas and related, you can see is to lead the region's energy transition with strong returns. Why we think we can do this? Actually, Sembcorp has built a very interesting portfolio. We remain very, very strong in Jurong Island with our core assets. Recently, as you know, we bought Senoko as well. Senoko is in the North. So now strategically, we have both in South and North, which is very, very strategic positions because North Senoko is the only plant. And in Jurong Island, we are in a very interesting position. As Kim Yin also has mentioned, I think the power needs because of the AI and because of the energy requirement, 24/7 stable power is still very much in demand. And we see that clearly in the region and over other countries as well that I think the 24/7 demand continues to be there. We are also the only GENCOs that have LNG pipe gas importation, and this gives us a lot of flexibility in optimizing our assets. And we are also the largest green energy supplier in Singapore. Recently, we just imported 50 megawatts of energy from Malaysia. And in Singapore, we continue to be the largest player in green energy supply. A few things that we want to do. I think in the near term, you can see is really to optimize Senoko Energy. We just bought, and we think that there's a very, very strategic positions that we have entered into. There are power demands around the area because it's in the high demand zone of semiconductor, and we want to serve the semiconductor sectors. Provision of gas. Senoko is also a gas-fired power plant, the largest power plant in Singapore. So we want to see how we can actually synergize on the gas portfolio. This position that we have in Senoko will create a lot of optionality for our position in not just power, but also gas and also how do we turn Senoko transiting them into the next state. Global assets that we have, I think we continue to ensure that the stable -- the income remains stable. Cash flows remain strong. And this is what we want to do continuously for sweating the assets in the global assets that we have. In terms of growth, we see that we are in a very unique position. We are a Singapore-based company. The 4 switches that Singapore government has actually announced a few years back, we are in all the 4 energy switches. As I mentioned, we are in natural gas. We are the largest in renewables. Regional imports, we are actively pursuing several imports. We are still working on it. Low carbon initiatives also, we are looking at a few of these options that we have developed. And I think in the near term, you'll see some of these things panning out a little bit more in a greater shape. Regional expansion, I think we are very strong in the optimizing gas, power, and we see that as a potential way that we can increase our capabilities in energy hub in Singapore and also not just in Singapore, but in the region as well. We aim to have a 5% earnings CAGR growth with best-in-class ROE. And just to repeat, as a teenager, we want to really run very fast to lead the region's energy transition with strong growth because in this period of time, we think energy transition is a key one. Gas remains a core activity and how do we transit gas. I think this is a good opportunity for us to find ways to do that. With that, I'll pass the mic to Alex. Thank you very much.

Thank you, Chuck. It's good morning, everyone, and nice to see some familiar faces. It's interesting to see how we are seated. You've got the West and then the East. It's -- I just wanted to keep things simple. The -- a lot of people have asked me about West and East. And what we have in the East is predominantly just China and Southeast Asia. And in Southeast Asia, we are currently operating in Indonesia, in Vietnam and the Philippines. Our ambition is to be the most profitable company in the region, accelerate growth in Southeast Asia, taking advantage of China Plus One and enter into new markets. I think there is a lot of potential to grow in new markets. So starting from left to right, I'd like to talk a little bit about the value we bring to the table, what we're currently doing and our future growth priorities. So starting from the left, Southeast Asia is a very diverse collection of countries, and we need to develop local partnerships to drive growth. And this is right up our alley because we have demonstrated a track record in forging strong partnerships in the energy and the urban businesses. And as Kim Yin and Eugene mentioned earlier, we have also entered into new markets in the last couple of years, Oman, Indonesia and Philippines. And also in China, we have a very strong procurement team who is very well connected to key players in the entire ecosystem, and they will be able to help us to drive further cost efficiencies in projects outside of China. So moving to the middle column. So this is what we are doing today on a daily basis, right? So during our last Investor Day in November 2023, we went through specific examples on how we are doing in our daily operations to improve returns. For example, for some of the selected assets in China, we developed our own O&M team, and we were able to see some meaningful cost savings versus outsourcing to third parties. China is a big market, as everybody knows, and different provinces will offer different opportunities with different risk/reward profiles. And that being said, we have remained very disciplined in our investments to date, and we are focused on locations with very strong demand and supply fundamentals. So far, all of our 100% owned assets are located in net power demand centers. And what does that mean? That simply means that the power supply is not enough to cover or to meet the power demand, resulting in the need to import power. So that's the -- that's where we are in terms of the projects that we have. Also in the last Investor Day, we talked a little bit about the strategic partnerships we have in China. And generally, they are large SOEs with significant scale, right? For instance, SPIC is one of our key partners. They have 190 gigawatts of installed capacity today, and they're currently the largest renewable energy player in the world. They adopt some of the world's best practices. And so for the past 2 to 3 years, what we've done is besides enjoying the technology and knowledge transfer from our teams in India and Singapore, we have also been benchmarking our performance consistently versus our partners in China. And that has really raised our awareness, that's basically brought our game a couple of notches up. And this is especially true in the use of technology where we could reduce cost and increase productivity. For instance, drones to clean the solar panels in places that's a bit less accessible. We use acoustic sensors in the wind turbines so that we are able to differentiate the noise from the blades and predict which blades are perhaps problematic and due for maintenance. So those are the things that we do, which has really benefited our operations and has driven costs down. Moving to the right-hand column. In terms of our growth priorities, as I mentioned earlier, we plan to accelerate growth through partnerships. We have strong presence in countries like Vietnam and Indonesia in our urban business. We also plan to leverage on those relationships to grow. We've made recent acquisitions in Vietnam, in Philippines, and we plan to continue to grow through new acquisitions. And lastly, entering new markets, that's the exciting part, right? That will help us to accelerate our growth ambitions. In Southeast Asia, as Kim Yin and Eugene mentioned earlier, we've basically signed an SPA to acquire 100 megawatts of solar assets in the Philippines. Our solar project in Nusantara in Indonesia was completed recently, credit to Chuck and his team. But with that strong momentum, we plan to enter new markets, especially those with strong power demand from data centers. That's very interesting to us. And Chuck has obviously done that with -- in Singapore. So we are looking at countries perhaps in Malaysia and Thailand. There are other many other different countries in the East region, and we will take some time to study and figure out which markets to enter. But in summary, we will focus on building the most profitable portfolio in this region and growing to 15 gigawatts in the next few years. And personally, for me and the team on the ground, this is truly an exciting opportunity for us. So stay tuned for more to come. Thank you. I'll hand it over to Vipul.

Thank you, Alex. As Kim Yin said, Renewables West is our markets west of Singapore, which is really India, Middle East and the U.K. So if you step back and look at this line of business, it's a pretty strong business, which is really well positioned for growth. Now why do I say that? Because we are in the right markets and we have the right capabilities even today. If you just look at the India and Middle East markets, these are markets which you'll agree have a pretty secular growth momentum already, very different in their own nature, but both undoubtedly growing very strong in terms of -- very strongly in terms of renewables. A very conservative estimate of the market addressable opportunity would be about 50 gigawatts a year, if not more. India itself at about 30 plus, the Middle East scaling up pretty quickly at well over 30 plus more. So it's the right markets. It's growing quite fast. But I think we've also managed equally importantly to create demonstrable, proven, deep end-to-end capabilities in this market. Whether you look at our ability to put together projects which are winning projects in a disciplined way, not just going into every bid and winning, but disciplined projects that deliver not just the bid but deliver returns as they build out. If you look at our EPC capabilities, and it's really worth focusing on the engineering piece of it, the procurement piece of it in collaboration with Alex and his team and the construction or project delivery piece of it, which are now all over the country, those are really distinguished set of capabilities relative to several competitors who play in the market, but really are more in a build or flip model. Financing, we've been privileged to get the trust of local financing institutions, of course, with a very strong overall balance sheet from Sembcorp. But the ability to manage debt coming in and constantly improve our terms on that. All of these together give us a certain momentum in the market. You've seen, as Kim Yin and later Eugene talked about, we are now able to deliver on the ground complex project from start -- projects from start to finish. 5 years ago, the India renewables business was largely wind. Today, we have wind. We have about half of our portfolio in solar. And of course, we've had our first battery win in India as well and taking a lot of help from the group, both from Singapore as well as the U.K. What this does is allows us to actually do something that very few players in this region can do, which is to leverage very deep capabilities in India to build a new business in the Middle East. So if you look at the very capable and strong competitors we have in the Middle East, very few of them have the kind of India presence that we have. And therefore, that allows us to take the engineering, the procurement, the governance capabilities that we have and extend them into the Middle East, of course, building our teams in the Middle East as well, where we've been present for a while. So the right market, the right capabilities. And I need not mention that the kind of leadership we have in India, some of whom are dialed in today is really what's giving us the confidence to do this. Now -- so that's the first piece of it. The second piece is really that we've been able to achieve momentum already in terms of delivering our commitments. What do I mean? The India portfolio today is very different from the portfolio a few years ago. We are about 6 gigawatts today, of which about half is operational and about half is secured and under construction as we speak. The -- as Eugene mentioned, the mix of the portfolio is a very healthy, almost a 50-50 wind and solar mix, which also then gives it the resilience to stand the test of time. In the Middle East, after basically running a couple of very well-run integrated water and power plants in Oman and Fujairah, we completed the Manah project. without going into too many details, I think you can all realize that completing a project ahead of time and cost allows us to be very happy with the returns that come out of that project, and that gives us the confidence and the wind in our sails to do more in the Middle East. As you know, also, project scale in the Middle East tends to be large. And so these are larger projects typically, but they also tend to be lower risk in terms of execution with land, transmission, et cetera, being provided upfront. So that's the momentum in the Middle East. And of course, green fuels, we continue to work on hydrogen in a measured, disciplined way, putting together cost competitive projects, especially on the supply side out of India and working with governments in Asia. And the other thing worth mentioning is really that as you look at our Wilton business in the U.K., we have a very unique site which has now started to bring in energy transition customers after a gap of a few years. And as that whole region starts to focus on energy transition, the Wilton site is really well positioned to grow and become a center there. So what does all this mean in terms of growth? For us, the way forward really is about -- the word I'd like you to take away is accelerating growth. This line of business is really about accelerating growth. What does that mean? In India, we've already scaled up our bidding. You would have seen in the previous presentation that India had wins of just over 2 gigawatts of actual installed capacity in the last year alone. And with the Indian government now making the forward-looking bidding calendar clearer and committed, that momentum is good. There are M&A opportunities in the market. And while we don't rush into every opportunity, we -- as you've seen in the past, we go in a very disciplined way where we can really make a difference, we are not afraid to strike. And of course, what that means is as we build out our capabilities and scale them up, we are also building the capacity to support the Middle East and other regions. So that's really the story in India where we are very, very busy scaling up. In the Middle East, it means we take the success in Manah and extend that into other projects in Oman, in the UAE, where we are already present. And of course, we are looking at Saudi as well. And that means we participate in more bids, but we do it in a lower project risk environment, and we do it in partnership with established players as well as in the Middle East, as some of you may know, EPC partnerships are quite important, and we are already in the process of finalizing those, and you'll see those as the projects build out. What this scale allows us to do, it sets us up well in the coming days for capital recycling. And I'd just say watch this space. And obviously, this becomes a very interesting portfolio from that point of view. So what are we trying to do in terms of ambition and scale? This is a portfolio that's today at around 7 gigawatts, growing very fast, and we intend to see this portfolio at about a 20 gigawatt scale. I'm not putting a specific year on that, but this is in the next few years. And really speaking, as you step back and look at this line of business, what we'd like to do in terms of ambition is be the most profitable renewables platform at around a 20 gigawatt scale that's driving growth in these 2 very, very high potential regions. And I'll leave it at that. Thank you.

So thanks, Vipul. I think from my perspective, the integrated urban solutions is indeed a teenager that's growing up and a teenager that's going through its exams and having a couple of subjects that he's scored on, right? Now I think from the urban business in the Integrated Urban Solutions, it's consistently scored around a B or C, right, prior to 2024. And last year, we saw a strong turnaround in this business and seeing its grades going towards a B+. I don't want to say A yet, okay? And for the water business, it has always been stable, right? And we see this as an opportunity for us to relook the strategy, reexamine all the capabilities that we have and how do we drive growth faster to be an A+ player, to be the fastest-growing and most profitable industrial solutions player in Asia. Now why do we think that we have all the ingredients that allow us to do that? Now I think if you look at both the water as well as the urban business in the portfolio, we are actually firmly established in the key industrial growing countries out here in Asia. And we're talking about China. We're talking about Vietnam as well as Indonesia. Now for the urban business, right, we have went through our own Investor Day coming out clearly with our targets in June of last year, right? But I think what the urban business has established is a strong track record, particularly in the countries of Vietnam and Indonesia. What we have demonstrated is that we have a continued strong -- continued history of over 25 years of developing 13 currently running parks in Vietnam and also very successfully driving the uptick and the sales of our KIK park in Indonesia. So for that, we have certainly gained a lot of attraction, right, given our track record and also leveraging on our G2G reputation to continue to be able to penetrate these markets. But more importantly is, there's an ongoing theme that supports the development of industrial parks and solutions in the countries that we're talking about and also potentially in new markets that we're going into. Now clearly, we are seeing supply chain shifts. We are seeing China Plus One supply chain shifts across into Vietnam and Indonesia. both from a light manufacturing perspective as well as even heavier industrial ones. So for example, in 2024 itself, in VSIP, we saw an acceleration of uptick of the land sales across various industries, more light to medium. And in PIK itself, we actually saw more heavier industries being picked up there. We saw certain renewables supply chain manufacturers and also battery manufacturers taking up space in our industrial parks to establish their manufacturing facilities. So we believe that the capabilities that we have, right, the combination of that will allow us to capture on these teams and to drive growth faster. Now for our water business, although we have -- you have not heard me talk a lot about it, the fact of the matter is that in China itself, we have a 25-year history of operating a strong industrial as well as a municipal water portfolio. We have about 2.1 million metric -- cubic metric processing design capacity, right, of which 70% to 80% of that is industrial water capacities and about 20% to 30% of that is in municipal water. This business generates a very stable $40 million to $50 million net profit a year. And we believe the capabilities that we have built in there will allow us to look at opportunities to transform the portfolio, to prioritize our capital allocation towards higher returning assets and potentially also adjusting our capital allocation out of assets that are not returning as well. We will also have the opportunity to take those water capabilities, right, and to synergize across our industrial parks strengths as well. Clearly, industrial growth would be present in Vietnam and in Indonesia, and we are well positioned to capture that. Clearly, as industrial activities grows, particularly in the more gravitating towards the heavier industrial side of things, the management of water will have a strong demand for that. That will allow us to export those capabilities to cross-synergize across our industrial park capabilities as well. So in short, we believe that the growth opportunity, the thematic growth opportunity is there our strength and track record in demonstrating our operational capabilities and bringing benefit to the countries that we operate in is there, and it will allow us to deliver the commitments that I talked about, delivering low-carbon industrial parks and as well as optimizing our water business. So going forward, our focus will be quite simple and clear, right? We want to drive accelerated growth and accelerated growth is really the theme for IUS in the coming years. We will drive faster land sales, right? Clearly, as you can see, to capture this thematic strength that we are leveraged to capture. More importantly, we will also look to focus our marketing and our product development, the industrial park product development focus towards capturing certain fast-growing industries, for example, data centers, right, as well as renewables or certain heavy supply chains that's migrating out into the countries that we are strengthening. Now more importantly, this is an organization that has a strong track record of being able to successfully acquire good businesses, right, and good portfolios and to integrate the capabilities within Sembcorp. So clearly, we will be pursuing accretive acquisitions to strengthen our market positioning wherever we are and also to enter new markets. And we will leverage across the capabilities that we talked about, particularly our industrial park presence in the countries to bring the water capabilities out and also across our renewables presence in certain countries like India, for example, to enter those new markets. All in all, the team will be to accelerate growth and to grow the portfolio and to be able to achieve at least a mid-teens earnings CAGR and more than a 10% ROE for the business therefore, putting us in a position of being the fastest-growing and most profitable industrial solutions player in Asia. Pass the time back to, Kim.

Okay. Thank you, gentlemen. So you can hear the common message from all of them, growth, growth, growth, faster growth and profitable growth, right? Those are the key operating words coming out of this. So if I may, just to sum up today's event without distracting us from the main message, which is really if you take something away from today is that Sembcorp, we have delivered a good set of results, crossing $1 billion net profit for 2 consecutive years, and that has given us the confidence to increase our dividend to $0.23 per share. We obviously -- if you hear us from the past, we have been quite careful in signaling increase in dividend even when business was good. We started with giving out special dividends because we want to signal are we -- maybe this is a onetime thing. But now we are saying $0.23 ordinary dividend, and it signals that we are confident that we can sustain this moving forward. So we entered a phase in which I would call a new normal for Sembcorp. That's the first message. And then we're reorganizing to capture the global transitions that I mentioned, energy transition as well as industrial transition. And you saw the quality of the management team, just a subset of it, I'm very proud to be part of the team. And we will be driving further growth, faster growth, deeper growth so that then we deliver value to our shareholders just like we did in the last 4 years. So thank you.

Thank you very much, Kim Yin and panel members. We have now come to our Q&A session. [Operator Instructions] We'll take questions from the floor. Rahul, first.

Rahul Bhatia from HSBC. Three questions from my side. The first one on the last point that you mentioned, Kim Yin, about the dividend. Congratulations on that. Could you help us understand your thought process behind increasing dividend and how it has changed compared to when we had invested back in November 2023? What prompted you to increase it? Because I recall back then, we had a big pie chart of around $14 billion of investment a lot of the operating cash flow being reinvested into renewables. Just trying to understand how this incremental cash flow, where is it coming from? Considering if we compare '24 versus '23 we have higher dividend, but at the same point of time, higher debt as well on the books. Second question. I'm intrigued by the Gas division. You mentioned 5% earnings CARG growth, I assume it's for '23-'28 period. What will drive that? Could you just maybe highlight a bit more? Because, again, at Investor Day, your forecast was, I think, 1% or 2% decline CAGR and now we are talking about earnings growth. Is it more coming from the recent acquisition of Senoko or maybe the new gas plant that is going to come through? Or you are actually thinking about making more investments in Gas division in the future? Third one, a short one. The entry into Philippines. It's a bit of a small detour from your strategy of entering into new countries where you always have preferred going into JVs, but this time, it's a 100% acquisition. What prompted that? What gives you the confidence about going all on your own in Philippines? Yes.

Thanks, Rahul. I would ask each of my colleagues to deal with the questions. But in a nutshell, in terms of dividends, how we're thinking about it, what has changed, really certainty. That's the one word, right? In 2023, we have tasted first success in our contracting strategy in Singapore, right? And you know that Singapore contributes some 75% of our earnings base. So over the last -- the time that has since passed, our strategy continues to play through. We continue to see momentum, and we have continued to be able to deepen. And that's why in my delivery just now, I said that we have the largest portfolio of high-quality downstream customers now in Singapore and that we are gaining the confidence that this can we can grow that, at least sustain that. So the certainty is giving us that. But I will ask Eugene to address that in more details. On the gas side, the short answer is that, yes, we want to grow beyond Senoko. We want to grow beyond the new gas plant. One thing that has changed, right, since the last time we spoke to you is that it's becoming quite clear to us that global sentiments have shifted. And also what I mentioned just now, I touched on, gas will continue to be very, very important as economies transit, right? So not just for Singapore, where we have such a strong position, but also in the region, in all developing economies, anybody who wants to grow their economy, the power demand is always a function, a multiple of the economic growth. Renewables -- it's becoming quite clear renewables ain't going to cut it alone. But people will still plow into the renewables, right, but it will not be sufficient. Gas will continue to be unless, of course, people want to go into coal, but I think gas will continue to be very important. There will continue to be growth in gas. And since we have a strong position, let's leverage on it to deliver value for our shareholders. So above and beyond what we have announced, we -- our ambition is to go beyond that. So that part of it has changed. And I will ask Chiap Khiong to deal with that and if there are numbers associated, Eugene can supplement. Philippines, Alex will talk through that, okay? So Chuck, if you -- no, the...

Let me touch on the Dividend first.

Eugene, sorry.

So Rahul, the question you have is what has changed? Now firstly, if you look at the capital allocation that we talked about just mathematically on average, we are saying that there was $14 billion, right, of which half of it is basically operating free cash flow, right? So $7 billion. And then if you just take a simple division by 5, right, that's $1.4 billion. And I think this year, if you look at my free cash flow, I'm actually able to sustain it higher at the $1.8 billion to $2 billion. And when we look forward, we are actually confident that our operational and free cash flow generation probably will be able to improve over what was previously thought of. Why? I think from a project performance standpoint, we are seeing actually, for example, in India, we are seeing tariffs stronger than what we had initially expected, right? So that is one of the considerations. Now the second thing also is very relevant to the second question that you are asking, which is -- and you have already probably heard me talk about this in the -- well, after we have announced the Senoko transaction, where I think from a group perspective to -- for more efficient capital allocation, we do expect some growth that is coming through gas. And we know that when there is a growth that's coming through gas, capital returns are actually a lot more efficient, right? So the combination of these factors give us the confidence that apart from our current very strong contracted cash flows, we do expect the cash flow returns coming in to be probably efficient -- more efficient and generally faster, so which allow us to take the view that we could increase and sustain the dividend over the execution period while keeping our net debt to adjusted EBITDA roughly still where I've previously guided, right, around $4.2 billion to $4.5 billion where we would still comfortably be in the investment-grade region. So these are the key things that has changed in the last 1 year that give us that confidence apart from our realized strong performance, but also looking at the opportunities to adjusting our capital allocation and also particularly in India, where we are seeing tariffs a lot stronger than what we originally had expected.

Rahul, I think maybe I'll tackle the questions maybe by different zone. In Singapore, for example, the last couple of years, you can see that we have actively securing long-term contracts. Actually, the long-term contracts is really a partnership with customers to actually travel the journey with them on energy transition. And most of the guys that we contract with are huge demand in Singapore. So one part of it, you can see in Singapore, we are very strong in various positions. We have gas positions. We have power plants. Location-wise, if you see, we are very uniquely located in 2 very interesting hubs. Jurong Island hub, 40%, 50% of the carbon actually resides in Jurong Island. And we've got extensive assets there, including service dock corridors and plants that can potentially service this segment of energy transition. In Senoko, there's also a very interesting hub because it's in the north, very close to our neighbors and the plants there are a bit old, and we need to think about how to refurbish it or rechange the shape of it. With the customer kind of a relationship with the gas that we have, with the green energy that we have, I think we are quite well good positions for us, not just increasing thermal load, gas load, but also energy transition along the way in Singapore. So I think in Singapore, I think we are quite uniquely placed for potentially capturing some of these positions that we talk about. With Senoko itself, our gas -- total gas demand has also increased. So you can actually see that from that perspective, our procurement aggregation and making sure that we can actually optimize the gas position can also be at play as well. That's for, I think, Singapore. Then extending to the region because of the Singapore hub, and we are looking at many things, bringing energy to Singapore in terms of gas, in terms of power, in terms of other forms of energy transition methods. And that part as an energy hub in Singapore, you can also leverage on that to extend it to the region. Of course, in addition to that, I think we have really good positions in Middle East and China for gas plants. I think one of the skill sets that we have is really developer skill set. And that skill set, I think, like Kim Yin said, I think in the past, we have actually not been extensively pursuing that. But we do see a lot of new activities, the demand for power remains very, very strong and gas remain very, very strong. And with these developed skill sets, we are also seeing how do we -- how can we actually leverage on it and continue to build on those positions. So various fronts that I think we are looking at. The aspiration growth of 5% CAGR, single digit, but the base is quite big. So I think this is something that we are aiming for.

Rahul, on your question in the Philippines, 100% on going through partnerships, right? Our philosophy and strategy on developing partnerships hasn't really changed. In this case, in the Philippines, I think we saw a good opportunity. The assets were good. And we had every confidence to do it because if you look at the scale of the project, 96 megawatt solar isn't that complex, right? We have a good team of people from Singapore who are very familiar with operating and maintaining and constructing solar projects. And I mean, in fact, a lot more complicated than this. So we're fairly confident that we can do this. We are still in the process of engaging potential partners. We're not -- haven't reached a stage where we could do something that is more definitive. But I think when we see a good opportunity, we like to view ourselves as being nimble and flexible and having that ability to step forward and take the project first and then decide later on whether to run it on our own or whether to partner it with somebody else.

Having an asset on the ground, certainly a good beachhead to start developing new business. Now the party that we bought this asset from, we are also, of course, engaging them and with the hope that there will be more to come under their portfolio, right? So there is still a partnership element. Although at this stage, I think we fall short of calling it a strategic partnership or something like that. But Alex is right, the thinking and the way we approach a new market has never changed, still the same thinking. But this is a good beachhead for us to start with. It's a party that we hope to do much more together.

Sir, Joe [indiscernible] Singapore. So just 3 questions here. Could you just provide more color on your Myanmar asset, please? I assume the plant has been operational since the 2-week shutdown in August, but the plant availability factor of 72% seems to show greater impact last year. So has it been running below capacity? And could you just provide an outlook for that asset this year? And secondly, I think for Vipul, I note among your job scope here at Renewables West, is a rejuvenation of U.K. operations. Do you have any targets you can share for that? And finally, has Sembcorp managed to benefit in any way from the $5 billion future energy fund that was announced at last year's budget? And with another $5 billion that was announced at this year's budget, what plans do you have to capture this opportunity?

Okay. Myanmar, I'll do that quickly. No, last year, we had a major outage, a planned maintenance, all right? So despite all the things that are going on, the team on the ground was able to work with the OEM GE to have conducted a major maintenance outage and that's why the load factor is down. In the meantime, it is still delivering the cheapest electricity in the country. They continue to be prompt and full in terms of servicing the payments under the contract. So that carries on. Vipul, you want to deal with the...?

Yes. I'm going to defer to Eugene on what he wants to share on the targets. But I'll take a minute to describe to you what we are trying to do in the U.K., which is really a combination of 2 things. As you know, we have a business that comprises 2 parts. One is the Wilton business, which is really a large industrial site in the Northeast of England, which is one of the focus areas for the country to revive industrial growth in the country. And as such, is very, very well positioned to attract energy transition investments. If I take in and around our site, there are multiple projects coming up by various developers in blue hydrogen, green hydrogen, SAF, green fuels, carbon capture, clean power, et cetera, et cetera. And as such, this site has a very strong grid connectivity. We have land available. gas and other connections available and many utilities that we provide. And so the first focus of the U.K. rejuvenation is to make sure that momentum of growth in that business keeps pace with the opportunity. You may have seen announcements in the past 60 days or so with at least a couple of new customers coming in, one deciding to come on to our site and one deciding to come right next to our site, but using some of our infrastructure. And that momentum has been built out. So that's the first part of it. The second part of it is really, as Eugene mentioned, there is volatility in U.K. prices and the Flex business does depend on weather patterns. And so while we've seen, for instance, in January this year, some spikes in power prices, and we've really benefited from that. The fact is that, that's a relatively small but merchant business. And so the second part of our work there is to resize and make sure that the cost structure of that business reflects the ability or gives us the ability to ride both the ups and the downs. So that's what we're working on. And yes, in terms of accessing some of the large subsidies that are being announced and being rolled out, the nature of the Wilton site, think of it as a mini Jurong Island. And so the business model there is we are the owner of the site, the utilities and the orchestrator of who comes in and making sure that customers get that customers get the synergies from each other. And that's what we are focusing on doing. And so the customers would really be benefiting from those subsidies, but we would be benefiting from them coming on to the site and really allowing us to capture both top line and bottom line out of that.

What I think Vipul may have sold himself short is that in the last 12 months, under new leadership, right, we have a new CEO in U.K. who's been in place for a year. Mike Patrick, Mike, you want to stand up and introduce yourself? Yes. So Mike is here together with Vipul and their teams, in the last 1 year, they have been working very hard to improve the business, right? And we rationalizing the headcount, for instance, right, aligning the business structure more towards the revenue structure. Vipul talked about the business being -- the market being very volatile, right? So sometimes you have a very cold winter, there are a lot of spikes in wholesale market, sometimes in a very warm winter, you have 0 spikes. So what we want is actually for our cost structure to mirror the revenue structure more. In other words, more variable costs, less fixed cost, right? So this is what team has been doing to get the business into the right shape. Whether or not it is effort or it is luck, in the last 2 months, we've seen ourselves capturing some of the spikes in the U.K. winter, right? So that is, for us, also another turnaround story, although we don't want to brag about it yet until we see numbers, right? But on the ground, the team is seeing some very encouraging signs led by Mike and Vipul. So that's on U.K. Can I ask Chuck, since he looks after all Singapore, how do you think about the $5 billion future energy fund the government has announced? And what are we doing to leverage on some of these things?

I think definitely, this $5 billion is an interesting good for the industry because energy transition is not easy. And I think Singapore government actually realized that and I think created the fund for this. As I mentioned earlier, I think we are very, very active in pursuing a lot of energy transition areas together with [indiscernible]. And of course, we are seeing how we can actually work with them and look at this $5 billion and see how to make some of this energy transition works as well. So we are working on it.

It could come in the form of -- I think the $5 billion at the end of the day, it might look very big, but actually in the energy world, it's not a very big amount. But I think government will be looking towards catalytic type funding, right, to support some of the newer solutions, for instance, carbon capture, for instance, energy import, for instance, maybe hydrogen derivatives. So to answer this question, you might take a workshop that is 1.5 hours, whereby we will tell you all the things that we are doing in all those areas in terms of import, in terms of hydrogen, in terms of carbon capture. But suffice to say, I think we are as well positioned as any one player to tap on these funds, our projects, right? So that's how I would call it. But if you are interested, I'm sure the team is happy to engage you in more details as to what we are doing in those spaces.

Thank you. We'll take the next question. Maybe Nikhil.

This is Nikhil from Goldman Sachs. Three questions. Firstly, on the gas business. The ROE has been really strong at 32%, and that is when you have an ongoing CapEx for your 600-megawatt plant. You're also, I think, as earlier -- asked earlier, you're looking at 5% CAGR of earnings growth still in that business and with the CapEx maturing for your 600-megawatt plant. So how do we make sense of your previous targeted ROE of 15%? I know there are a few things have happened in between Senoko acquisition, et cetera, but versus we are 32% now, and we are growing earnings as well. And what can go wrong with the ROE? You mentioned about a lot of contracted portfolio. If we reset into a $5 LNG market, again, the war, let's say, in a scenario if there is a flow of gas back to Ukraine, LNG prices collapse. There is a wall of LNG capacity coming 2 years later as well. We reset into a $5 LNG market for 5 years or 3 years. How -- like in that scenario, should we still hold on this ROE will sustain? So that's the first question. And just 2 other very quick questions. On the China business, you mentioned China renewable is 10% of the profit. Can I ask what percentage of your this year? And maybe in the medium term, what percentage of your CapEx is for China renewable business? And lastly, just a question on India. There is this new 2-hour BESS requirement for the future tenders, you mentioned about your procurement advantage to take complicated hybrid and BESS style projects. Can you give more color on that? Like batteries are reasonably well supplied market from China. Everybody will be importing batteries from China. How does your procurement advantage translate into any kind of improvement in your return that can get you in a better position to win the same project versus your competitors? Like how do we understand that as a real advantage from a return perspective?

Eugene?

Yes. So I think we'll talk about first, the gas CapEx and ROE for the gas segment. I think, Nikhil, you have always heard me talk about a couple of things, right? Number one, the gas segment, right? One of the reasons why the ROEs are that high is simply because the assets are depreciated. And we will be incurring CapEx for new H class. Now we have benefited from being able to enter Senoko at very attractive valuations. So in general, I have always guided that the ROE of 32% or the ROEs in the gas business currently are probably reflecting the fact that the assets are a bit old. Now the ROE guidance of 15% is obviously on the -- a couple of things. Number one, it is on the perspective of, number one, new replacement H class CCGT, right? And ultimately, being able to contract long term, right, at a more stable long-run marginal cost type of a dollars mark spread. So I think from our perspective, the long-term ROE of a gas business must will ultimately trend towards that because the thing is that's economics, right? But having said that, where we end up in 2028, while we have given the 15% ROE guidance, it will probably be somewhere in between.

Maybe just add on to Eugene's point, I think there was second question about LNG oversupply. Typically, we don't take any position on LNG. We back to back most of it with the customers' contracts. The way that we look at is to optimize the position. So when it is contracted, if LNG is low and we can back off maybe power or pipe gas or whatever, we will do that because we have different channels that we can actually optimize. But we won't run a long position just on gas. And if gas comes down, we're totally exposed. That's not our model. Our model is actually to contract then from all the various different positions and indexations, we see how to optimize it. So that's how we look at gas play. And gas is also very light in asset unlike the power plant. So power plant, I think when we look at it, it will be on a conversion margin and what's the target return that we are aiming for. For gas itself, it's quite an asset light position that we can actually optimize.

So these guys are smarter than me. That's why they're running the business, right? So -- but my simple mind, it's ROE is -- there's a numerator, there's denominator. The numerator is contracted. The denominator is a function of how much you pay for it. So in both areas, we feel like we're in a good place. Let's put it that way. So Eugene on CapEx plan?

So the question on the percentage of CapEx for China renewables. Now our China renewables is a pretty efficient way of capital deployment, right? So number one, we deploy outright CapEx only for 100% owned assets. We did commission a couple, not very big ones. And else, it will be equity contribution into the JV portfolio, of which the JV portfolio have showed a lot of strength in generating cash flows for organic growth. So that has always been the case. I think for 2024, when we look at the overall CapEx spend, CapEx and investment spend of about $2 billion, China renewables only contributed about 10% to 15% of that. So it's not very significant.

India procurement, Vipul?

Sure. So let me try and answer both parts of your question, which is what does this 2-hour requirement really mean? The office order or notification that came basically just said 2 hours of batteries. But if you think about the underlying market, it basically means no more or very limited plain vanilla bids, right? Now that's not just about batteries. Fundamentally, that is the government trying to recognize and signal out there that peak power requirements coming from renewables is a major concern. And so the kinds of projects that come will now be hybrids, RTCs, FDREs, batteries, all of them together. And what -- and that really plays to our sweet spot because the moment you say we are just doing a plain solar, that's a much simpler project than just than maybe adding a wind or adding solar or adding solar plus battery, et cetera, et cetera. And more importantly, it starts to mean that the delivery risk of those projects are now much more in the mind of customers. And so their ability to say, look, this is now not just about winning a bid, which you fiddle the assumptions, it's very easy to win a bid. But it's about delivering the project, commissioning it, operating it as much as maybe 20, 25 years. It could be as low as 10 years, but 20, 25 years. So effectively, what that means is the discipline in bids, as everyone starts to see the challenges of operating these, that starts to work in favor of players like us who have the engineering, who have the O&M and we've delivered it on the ground. So that's the overall comment. I come to your specific question, which is a good one about what advantage does this procurement really give us? So first of all, Nikhil, it's actually beyond batteries. It's not just about batteries. Today, I would say the biggest advantage, if I look across wind, solar and batteries, the biggest one is scale today. If I just rewind, say, 2 years or 3 years back, we were a 2.5, 3 gigawatt business. Today, we are a 6-gigawatt business and growing not just in India, but procuring for China, procuring for the Middle East, procuring for Southeast Asia. So that gives us a very different seat at the table with the same companies or the same suppliers, whether in wind or in solar or in batteries that we have done. So one, there is a real scale advantage. Second, coming to batteries. I think the advantages come in 3 places. Number one, we are one of the very few players competing in these markets that have actually operated batteries. Everyone is rushing in, but if you actually count players who have operated batteries, whether in Singapore or in the U.K., we are one of the very few. And so we know what the engineering is. We know what to take in. We know what not to take in there. We know what questions to ask. We know what risks to cover between the cells, the containers, the EMS, the BOP, et cetera, et cetera, et cetera. The second piece is I come back again to scale. For us, when we say we have advantages on procurement and scale in batteries in India, the advantage is not necessarily coming just from India. The advantage is coming from multiple markets that we are going in. And to me -- and this is a continuous sort of learning game. Even as we've executed Mana in the Middle East, we've seen the advantage of what an arm's length procurement does, it gets you some advantage. But versus being on the ground in China versus having deep relationships, not with their largest customers, but with them versus being able to sit in the factories of your suppliers and the kind of quality, the specs and therefore, ultimately, the electrons generation we get is just at a different level. There is an advantage there.

So just to supplement. In terms of relationships, on the one hand, there is a scale, there's the multiple markets, I think, it's important. On the other hand, it is also built over a long enough period of time and being a first mover. One example that I can think of going into India, for instance, we were the first one who bought wind turbines from Sany Heavy Equipment. So Sany makes all the construction equipment, but they also had a unit that actually builds wind turbines. We were the first one who bought their equipment in India, and that makes the entry into India. And today, Sany will give us special audience. When I go to [ Pune ] the Chairman would host me personally. So that relationship, I think, it's a little bit soft, but we are able to have this subtle access, if I have to call it. I don't want to call it advantage yet, but you have access -- we have access beyond the player just buying batteries in India and for the first time.

Actually, this is a great example. If I would just supplement the -- just add the point on Sany itself. Why were we able to get the confidence to say that Sany, which was, at that time, a relatively new entrant into wind. Why did we get the confidence that we could go with their turbines? Because we have the engineering, we have years and years of self-operations as one of the largest self-operated portfolios of wind in India. And so to be able to really assure ourselves that, yes, we can go. And today, that's a great relationship.

Meg?

This is [ Meg ] from CGS. Three questions, please. So my first is -- so I understand that there's new guidance for the gas segment, but I'm looking at the renewable side. So does your guidance, your 2028 targets for your renewable ROE and CAGR still hold? That's my first question. Your second question is adding on to the China ROE side forming 10% of your group profit in 2024. How do you expect that to change over the next 2 years? And lastly, on your dividend payout ratio, I believe it was about 40% this time. So is that the sustainable payout ratio that you're seeing going forward?

Eugene will do most of it. On the last one, what we are saying is that at $0.23, we are very confident we can keep it that way, right? Payout ratio is a function of 2 things, the number as well as the underlying profit, right? So what we're saying is that if I keep repeating myself, we are very confident in our cash flows moving forward in terms of funding our growth while at the same time paying out this healthy dividend. So at $0.23, we're very comfortable keeping it and sustaining it for the foreseeable future, right? So that's on the dividend. But, Eugene on...

Thanks for your question. I think in relation to the 2028 targets for the Renewables segment, we have said 25 gigawatts with CAGR of 25% and ROEs of no more than 10%, I think that holds as of now because we have not revised the targets. But I think more importantly is that as we are organized for the purpose of growth. You have heard Alex as well as the Vipul in terms of their aspiration, right? So clearly, we will be relooking at how we calibrate those aspirations into the forward-looking execution. But as of now, the formal target still holds, and we have not changed that. Now for China, the 10% net income, so it's 10% of net income now. So your question is that is the Chinese net profit going to grow in the next 2 years? The answer is yes, because there continues to be -- we would continue to look at potential capital allocation opportunities. Now the only thing to point out is that as we -- even as we look to grow the net profit, we will be very, very, very disciplined, right? We will not compromise on project structuring. We will not compromise on the project quality, i.e., what we have always talked about, making sure that they are in load centers, making sure that net demand regions, right, and holding our IRRs at about 10% to 12%. The thing is that if we do not meet those requirements, we will not do the project. So I think the intent and the expectation is that it's still a region that we would not -- we are not at this point where we would say that it will not grow, but the thing is that we will be extremely disciplined in looking at the Chinese market. Yes.

Eugene, maybe this is the time you got my favorite slide. So you heard Eugene talked about us taking a provision this season. That's in relation to receivables in China renewables, specifically, right, $19 million. Our base is about $100 million, right? So $19 million is a significant part of it. So we are always monitoring what's going on. And to the extent there is issues like curtailment or tariff reform, we take that into consideration. Now this slide on the screen, you can see the points that have been made, but allow me to repeat them again. Over the last 3.5 years, we did some 30 deals, right? They all add up to -- from 3 to the 17 gigawatts. And if you look at the bottom, there were the countries from which we do these deals. And you can see in the first 2 years, there's a lot of China. And in the last 2 years, there's a lot of India. I mentioned just now that it gives us that our ability to operate in this portfolio of markets allow us to shift focus and attention and effort depending on market conditions, right? So that is something I see as something that's very important to us. And so -- and again, in each of these countries -- these markets, you saw that we were deploying differentiated strategies. One thing that I do want to come back to the financials that's very important is that credit has to go to Alex and the deal team and of course, to the other deal teams in the other markets, but particularly for China. This provision that we just took, it relates to receivables and so on, right? But what we have embedded into our contracts, maybe Eugene has explained it, but I want to repeat that, is that there are purchase price adjustments -- in other words, if I receive less, let's say, subsidies than what was anticipated at investment time, my purchase price become smaller. There's a purchase price adjustment. So what that does is that my returns from this project remains, right? So give you a simple example. I did a $100 deal. I'm supposed to receive $10 a year, so it's 10% ROE, right, because 10 over 100 base. Now today, if I say, Oh, sorry, I think I will not collect $0.20 or $20 -- or $2, sorry. So instead of $10, I'm collecting $8. But corresponding to that, my purchase price is adjusted down from $100 to $80, right? So $8 over $80, I'm still getting my 10%. You see what's happening. So effectively, with this structuring, we have protected our returns. So if you ask me whether or not I'm unhappy with the deals that we did in the early years, not unhappy because the returns are there. But the deals are smaller. Now in hindsight, they're smaller than we thought they were. We thought we did 100 deal. Now we did 80 deal, right? So the exposure in China actually has been smaller. In that sense, that's just an example of illustration, but there were different deals at different structuring, but we try to put in place smart mechanics in order to allow us to be insulated from some of these issues, not totally unanticipated, to be frank. That's number one, right? Then the other thing is what Alex was talking about just now. In the first place, the fundamentals of the project, we try to place them in locations, we will buy into projects or invest into building projects that are in locations where the power and supply demand is healthier than otherwise, right? If you plan in a place in which there is too much of supply, then, of course, you are more at risk to a market reform, whereby the marginal plant will be setting price. But if you are in a place in which there is a net power importer, the chances of you not being affected is higher. So a combination of the fundamentals, combination of smart deal structuring, all those things are coming through into the picture. So I'm leveraging on Max's question to talk a little bit about more where China is because I think this is something that probably a lot of people have in their minds. Now precisely because of that, then looking forward, having done what we did and not being too unhappy with the deals that we have done, the projects that we have done. Then moving forward, that's why we are confident to say that, look, if we are smart about it, we can still grow, right? But how much is it? You can see from this graph is you already tell you that we have shifted in terms of the effort, in terms of the investments, in terms of the actual outcome, you can see it has really shifted just from the countries at the bottom, right? So we are shifting depending on where the opportunities are, they are attractive to us, right? We don't just go in there and indiscriminately do deals, which is what Eugene was talking about maintaining discipline, but I wanted to elaborate on what is the talk when we say discipline, what do I mean, right? It is in looking at the fundamentals, demand supply and the competitiveness, that's the business fundamental. And then also in terms of deal fundamentals, are you smart enough to negotiate something that will give you some downside protection and so on and so forth, right? So that's really why we think China can still be a good hunting ground, albeit maybe not as robust as it was in the past. We have to respond to the market conditions. We have to respond to where things are. Now in terms of returns, coming back, I just want to reiterate that we are still very confident in meeting the returns target that we have told you and for the reasons that I described just now. Does that answer your question, [ Meg ]? Sorry. Thanks.

Pei Hwa?

Congrats on the good results. I'm Pei Hwa from DBS. I have 2 questions. One is on our hydrogen-ready plant that is due to come online next year. I'm not sure it's too early to ask. What's the progress of our long-term PPA signing? That's one. And I think we also like to -- if you could share with us a bit more on the economics. What's the cost, return and the pricing mechanism we could expect as compared to our other gas assets based on the hydrogen? I think second is on SMR. As our government said that we are studying the feasibility. In the event that we -- government decided to include this as part of our energy mix, is it an area that Sembcorp will look to pursue the opportunities? And we already have the required expertise and capability to do so?

Okay. Let's go in that order. The -- I will ask Eugene or Chuck.

Okay. Let me deal with the returns first and then Chuck...

In the first place before? We didn't embark on building it without a contract. It is a contracted. We are covered before we invest, right? So that's the first thing and you can talk about...

Pei Hwa, I have mentioned again and again that this H2 new H class, we have already in the whole portfolio of PPAs where we have priced them, right, we have essentially covered it with the portfolio of PPAs, fixed dollars, spark spread gas cost pass-through, right? And it is priced -- the PPAs are priced on getting the unlevered return of 12% in dollars, okay? So that is -- that hasn't changed. But in terms of the progress of the building out of the H class, maybe Chuck can help to talk about that.

I think the progress is progressing. Well, we are still aiming for next year, 2026. I don't see any problem bringing the plant in. It's hydrogen ready, but it's going to run LNG in the first place. The hydrogen, I don't think is that ready yet for injection. The molecule is not there, but the plant is actually built as a hydrogen ready plant.

But the plant in terms of construction is well on track. We are quite happy with it, right?

Yes, yes, definitely.

So on nuclear, right? Before you go to the next question. Nuclear, we've actually put out a statement earlier on this, so I'm going to read it to you in case you didn't see that. So we continue to have ongoing engagements with players in the nuclear industry, right? For instance, last year, I was in Europe and I saw the GE, Lenovo CEO. He was talking about his project in -- his SMR project in Canada and all that. We talked to the guys from China. The fellow tell me that hey, look, he can send in, put everything on a ship, ship it here. I just kept on the electricity, ships everything back. So that's also a nice idea. So we are engaging all the nuclear energy industry players. There's been some exciting developments, including even in Fusion, right? I personally visited Commonwealth Fusion in MIT, a spin-off of MIT in Cambridge 2019. They're still building their prototype machine. Tomas has invested in that one. So they're breaking new grounds in safety and sustainability. So we -- Sembcorp, we now have the largest portfolio of downstream customers who is looking for green energy stable, reliable green energy. We are already supplying them the largest supplier of brown energy or gas-fired energy. We are the largest importer of natural gas into Singapore with LNG and pipe. So we are in the best position to anchor this new source. And we -- because whoever is trying to sell this energy into Singapore, they need to look for customers. Nobody is going to invest heavily into a nuclear reactor, and they're famous for the amount of CapEx that's associated with it. Unless you have got -- they're not going to invest unless you have got downstream customers that are tied to it. So we are in the best position to support that. Now having said all that, we'll only be doing so with -- in line with the Singapore government's pace. We will not front run the government, right? When government feels that it is comfortable, it is safe enough, when the government feels that this is the time to bring it in, we are there in alignment with the government's policies. And again, objective is to support our customers' needs for stable and reliable and green energy, right? So I don't have anything to tell you that you can factor into your projections. So that's the part that I feel very apologetic, but it's a little bit early for that at this stage. What the government is talking about is that. I think getting people warmed up to the idea that this is actually could be a good source, right? So -- and what we are saying is that Sembcorp is saying that we are the best position to take on this opportunity. You can imagine, I can't see the government awarding this first nuclear plant to a foreign player, right? And if this to be a Singapore player, you have less than a handful. And then among the less than a handful, who has the customer, who has the confidence to sign this thing up, it's -- we feel that we are in the pole position, let's put it that way, right? A lot of people make a lot of noise about nuclear, but at the end of the day, I think we are in the pole position. So let's not -- we can give numbers, I feel I talked too much, so I just stop.

It is too early to try to factor into your model, please.

Yes. Try very hard to...

No, you factor in somebody else's model factor in ours also. Because it doesn't make sense that somebody else can project this and we can't do it. Anyway, sorry.

Just if I can ask a follow-up on the hydrogen because you also have a hydrogen production. So I guess we do have a sense what is the incremental cost. If you were to use, let say, 30% or 100% hydrogen. Is it the number that we can share? What is the cost increase compared to natural gas? And because you have a cost pass-through, so I would assume that our customers, they are willing to pay more for green electron. Is that something that we could assume?

Yes, I think that Chuck can give the update. I think if we are going to have to have hydrogen in the fuel mix, then obviously, the hydrogen will be sold through on a separate term than what is what we have right now, which is a natural gas. But as to how -- what is the cost, it's a bit early to guide. But maybe around the thinking around how hydrogen ultimately would pan out and also coming into Singapore, maybe I'll let Chuck give you some insight.

I think, just to clarify, I think when we have long-term contracts with customers on hydrogen ready plant. It's never based on hydrogen price. It's always LNG gas pipe price. The optionality of green hydrogen, I think we are talking to many, many customers because like what Kim Yin says, the good thing is we partner customers who are doing energy transition. So we also know at which point in time and at what price they are willing to pay. I just say that maybe green hydrogen is a bit too steep price at this point in time. So maybe different colors of hydrogen may still be workable, but pure green for Singapore purpose may be a bit high. But nevertheless, I think if you can do some blending or maybe use some of the existing infrastructure, maybe the cost becomes more competitive. And the question is also which customers segment may take it up. Data centers, maybe because it's tied on to license, so maybe they will think about it. But general public, just pure hydrogen will be too expensive. Yes.

No. And if I may, maybe Vipul, you want to take 1 minute to talk about it from your perspective in terms of production and what is the difference between green, blue and -- in terms of cost structure?

Yes, sure. I think, first of all, every market is looking at this a little bit differently. From the Singapore market perspective, it's exactly what Chuk described, that it's really a question of how to afford the additional cost that would be there? And if that additional cost doesn't make sense, it doesn't go through. Other markets are taking a slightly different view. As you know, Europe is taking a mandate view. And Japan is taking a blending with a subsidy view. Korea is taking a similar blending with a subsidy view. And all these markets are now starting to target these fuels going more and more towards the hard-to-abate sectors rather than power being the first choice. The power is often a choice, but ultimately, the real sweet spot. So for instance, if you look at India, it's really being targeted at refineries for hydrogen molecule uses or fertilizers again for hydrogen molecule users. So that's just one comment at the back. I think the cost structure is a very interesting question, but -- and it's an evolving space. We are already seeing the comparison, if I take the comparison between gray, blue and green. Those are really the 3, if I take ammonia as a proxy for the hydrogen. If you take gray ammonia, somewhere around -- somewhere between the $300 to $400 range. Blue ammonia, anywhere between $500 to $700. And green, I would say, anywhere between $600 to $800, somewhere in that range. Those are different specs, different delivery points, different carbon intensity, et cetera, et cetera. But -- so we are starting to see some convergence, but there's still a delta. There's a gap. If you rewind -- if you rewound back 3 years, those numbers may have been $200, $400 and $1,000. So today, if we are at about $300-plus, $500 and $600 to $800, that's a difference in each of them. They're actually moving. So starting to converge, still very early days and engagement with the offtakers is really the key, right? So some countries like Japan and Korea have decided that they do want hydrogen, and they will make a mix between blue and green and provide the gap or close the gap with the subsidy, right? Europe, as I mentioned earlier, is taking a different view, which is saying you have to do it. And if that means market prices go up for certain products, they go up. So that's the evolving space at the moment.

Okay. You go with that. There are a couple of questions from online, right? So Louis from Citibank and Sumit from JPMorgan, both have questions relating to Senoko. Can I ask Chuck to comment on it? We may not have the answer for the first one, right? So allow me to read the question, all right, so everybody knows what's going on. So Louis' question is what range of profitability has Senoko Energy generated in the past? The first question? Second question from Sumit, JPMorgan, is that, could you please help us provide more color on potential synergies from the Senoko acquisition? Would you be able to share some insights on the partners in the asset? Are they keen to invest in the asset? Or do they share the vision of Sembcorp for the asset, all right? So Chuck, please?

Okay. I think the range of profit, I think Louis is -- let me answer it in another way. I think Senoko, if you look from the position itself, they are always tracking quite closely to the market because their contracts are usually short term and the flex in the profitability ranges according to what the market actually can command. Interestingly, Senoko is in the north. So I think they are in the load center. So generally, I think in terms of profitability, tracking the market. So if that question is about whether Senoko is within the trend of the market? I would say, yes. Maybe the second question also will lead to some of the things that we can actually do together with Senoko. I think maybe I'll answer the partner one first before I answer the potential synergies because currently, we took over [indiscernible] share. So we still have 4 other shareholders, Japanese shareholders working with us. Of course, different shareholders have different perspective in their thinking on Senoko. So we are currently still talking to them. And I think what we will do is to align those that has a similar goals with us. And hopefully, the alignment will be quick. And once that is done, then I think we can continue to see how we can actually change the shape of Senoko. If we do get into a position that we can take on more, then I think the more we can actually do because if you look from Senoko position point of view, maybe talk about the top line. The interesting thing that we are doing in Singapore market before Senoko is going to long-term contracts. Why we are able to do it because we've got other streams of things, gas, for example, we have pipe natural gas, we got LNG. With Senoko, now we also have another source of pipe natural gas and LNG. So interestingly, that forms about the bulk of the cost and we can then structure deals with customers on a long-term basis on pass-through mechanism that can actually go long term for that purpose. So top line, I think we can actually try to see how we can synergize the contracting positions on shipping the ship to more long-term basis using our whole portfolio. Then on a cost basis, also will be quite interesting because gas is a big component. Like what Kim Yin has said, we are the largest importer of gas, both pipe natural gas and LNG. We got good access to LNG market. We've got good access to all the terminals and pipeline. Definitely, with Senoko gas demand, I think our market demand for gas will step up. In fact, now we are the largest -- even go even bigger than that. And with this itself, the consolidation of the gas position will allow us to be able to manage our gas costs better as well. In addition to that, other synergies we can look at is really about operations. I think we are now looking at how to synergize operation, sharing best practices I think those are the things that I think we can actually do. But most important, I think the top line and the most substantial cost, I think we can look at doing something together with them.

Financing?

One more thing, I think, Kim Yin just reminded me. Of course, financing. Currently, the financing in Senoko is based on many, many banks. I think they have quite a lot of banks, I think, entered into quite long ago. So one of the things that we are working quite actively about changing the shape of our shareholders is also changing the shape of financing. And if the financing comes in and we can actually get more long-term contracts, I think the financing terms will become more attractive as well.

Yes. So there's refinancing, there is gas supply, there is the possibility of managing asset portfolio. For instance, we -- some of the older machines that Senoko has could potentially be used to contract with the Sembcorp portfolio to provide cover for the Sembcorp portfolio so that then we can go out there and run more aggressively at the Sembcorp end, right? And at the same time, also benefiting Senoko because now they have got additional revenue from the older machines that they otherwise wouldn't have so, right? So there are many actually potential synergies. We fall short of -- again, we can't provide you with numbers now, right, because some of these require the alignment with the partners, some of it requires the support of the government and so on and so forth, right? So -- but suffice to say that we are very happy with the acquisition. Suffice to say that we feel at this -- at the price that we entering, this project is not just strategic, but it provides a lot of optionality for us to create additional value, not just for Senoko, but also for our own portfolio.

We'll take another 2 questions from the web. The first is on renewables. Could you share your thoughts on capital recycling plans in India? And what's been the bottleneck in terms of realizing this ambition? And then the second question is more on an accounting. So if you look at our cash flow on a group free cash flow net investments basis, there's an add back of expansion CapEx and equity investment of $1.8 billion. Why do you add it back?

Why don't Vipul deal with the first one while Eugene work on the second.

For us, as you know, we've looked at capital recycling, evaluated it a few times in India. So it's a very valid question. I think the primary bottleneck has been scale. And so today, we are now at a very different scale. In a year or 2, we'll be -- we'll have 6 gigawatts plus of operational. And so the timing becomes right. The other aspect of timing is, of course, as you know, India historically had renewables receivables problem. As you noticed, for the last year or 2, we are not getting any questions on the receivables, and that's been well settled. And so both from a market perspective as well as our own scale perspective, we're now getting to -- it sounds about the right scale. And as we build that out, we look at it more seriously.

So I also want to supplement what Vipul has talked about in terms of capital recycling in India. I think apart from building up scale as well, I think the reality is that when you look at the India market over 2023, second half 2023 going into 2024, it has been more of a -- we see many, many sell-side M&As that's on the market. And you have heard me mention before, right, given that the climate and especially given the fact that we are able to still manage the growth funding, particularly having attractive higher return greenfield projects come online. It didn't make sense for us to be trying to capital recycling -- trying to capital recycle our very capable platform while there are many other deals that are out there, which we potentially would be looking at investing as well. So that is one of the reasons why -- but clearly, as Vipul has pointed out, we are reaching a scale that certainly makes sense. Now the second question from the investor, yes, there is an accounting question. The net investment of minus $2,754 million, I would have to point you to the cash flow statement, which is essentially a sum of -- which is Page 37 of the SGX net. Under the group FY 2024 line, it is essentially the sum of acquisition of subsidiaries, investment in joint venture, acquisition of other financial assets and a bunch of stuff, right? Now the question is why do we add back the expansion CapEx and equity investment of $1,816. The reason is because we do want to present the free cash flow on the basis of operating and a steady receipts, less the maintenance type CapEx and then to be clear, what is the operating free cash flows that we have available for the purpose of growth investments because that is the basis in which we have guided the market on our capital allocation. To go back to what I've said $14 billion, 50% from operating cash flows, right? So this is to give you a sense what is the available cash flows to fulfill that 50% of $14 billion, as I've guided, so that you will have been able to quite easily triangulate that number. To be entirely accurate, this free cash flow that we have here already is a little more conservative on a like-for-like against that 50% guidance because that 50% guidance is before the subtraction of maintenance CapEx, whereas this $1.8 billion is after the subtraction of maintenance CapEx. So if you take into account of adding back even maintenance CapEx, then the number is higher. Yes.

Thank you, Eugene. Any other questions from the floor? No? Any closing remarks, Kim Yin?

It's a broken record. It should be remind you that we are at a new normal. We are very confident of sustaining this new level of earnings, which then contributes to the dividend level and that we've got 3 growth engines all firing this season, gas, renewables as well as integrated urban solutions. So for the first time, I am very happy that I've got the team chasing after the 3 growth engines for us, right? So new level, running faster. That's really the message that I would like you to take away from this meeting. And if there are further questions subsequent to today, feel free to engage Xin and the IR team, and we will attempt to address your queries. So thank you very much.

Thank you, Kim Yin. We've now come to the end of today's briefing, wishing you pleasant [indiscernible].