Sembcorp Industries Ltd (U96) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to Sembcorp Industries First Half 2025 Results Presentation. A warm welcome to viewers tuning in via the webcast. I'm Xin Jin from Group Corporate Communications and Investor Relations. Before we begin, we would like to request for all mobile phones to be turned off or switched to the silent mode, please. If you feel unwell, please do approach our staff for assistance. The members of the panel for today's presentation are Group CEO, Mr. Wong Kim Yin; and Group CFO, Mr. Eugene Cheng. [Operator Instructions] Without further delay, I will now hand over the time to Kim Yin to begin the presentation. Kim Yin, please.

Good morning, and thank you very much for joining us today. Before we cover Sembcorp Industries First Half 2025 Results and Business Highlights, allow me to bring your attention to some external developments. Now can I have the slide? Yes, thank you. First, the announcement of Liberation Day tariffs in April, and this has brought about heightened business uncertainties, right, as expected and somewhat tempered customers' expansion plans. For example, we are observing a more cautious stance from several multinational manufacturers in our industrial parks as they assess the impact of the reciprocal tariff announcements. Secondly, there has been a rapid expansion of renewables in China, and that has outpaced demand growth. This, coupled with the lack in construction of grid infrastructure has led to increased curtailment. The Singapore dollar ironically has also strengthened these all other currencies across the board. And this has resulted in a negative foreign exchange translation impact on our reported earnings. Eugene will share more in his presentation later. Let me now bring you through the key highlights of our performance in first half of 2025. Now amidst the very challenging macro environment, we delivered a resilient performance. For the first half of 2025, turnover was $2.9 billion. EBITDA was $834 million. Adjusted EBITDA was $1 billion. Net profit before exceptional items and deferred payment note ForEx loss was $491 million. During the year, we recognized exceptional gains of $140 million, mainly due to the gain on disposal of SembEnviro. However, this was partially offset by a noncash DPN ForEx loss of $95 million. As such, reported net profit was $536 million. Earnings per share before EI and DPN FX change was $0.276 and annualized group return on equity was 17.8%. The Board has approved an interim dividend of $0.09 per share, underpinned by the resilience of our earnings. Contribution from the Gas and Related Services segment was steady in the first half of 2025. This year, there was lower overseas contribution due to the ownership transfer of Phu My 3 Vietnam, power plant in Vietnam in March 2024 and an extension of a major inspection for Myingyan IPP in Myanmar. In Singapore, despite the depressed wholesale power market, we leveraged our unique position as an integrated gas and power player to add over 120 megawatts of power purchase agreements. New customers include a mixture of data centers and commercial and industrial customers. Including these new contracts, over 85% of our gas-fired generation capacity are underpinned by contracts that are 5 years and above in tenure. In May 2025, we also signed a suite of gas, power and utilities contracts with Aster Chemicals and Energy with a contract value of over $650 million. In June, we increased our stake in Senoko Energy to 50% from 30%, which will deliver earnings growth. We also expect to realize synergies of up to $25 million from portfolio and gas sale optimization, cost efficiencies and lower refinancing costs. In the first half of 2025, the Renewables segment saw stronger performance with profitability increasing 27% year-on-year. This was due to better wind resource in India as well as contributions from new operational projects. Compared to the first half of 2024, our installed renewables capacity increased by 3.8 gigawatts to 13.8 gigawatts. Some of the new operational capacity includes the landmark 500-megawatt solar Manah II project in Oman and the first large-scale 400-megawatt solar project in Rajasthan, India. Our gross renewables capacity is now at 18.9 gigawatts, of which 5.1 gigawatts are secured or under construction. We continue to gain good traction in India, securing our second hybrid solar and BESS project and our first round-the-clock power project. We also signed a 25-year PPA with a subsidiary of Meta Platforms for 150-megawatt peak floating solar at Kranji Reservoir, Singapore. This will be Singapore's largest floating solar project to date. Earlier, we spoke about the higher curtailment in China. There's also the uncertainty associated with pricing reforms. As a result, we have been very, very selective in evaluating new projects in China. This chart shows the size as well as the number of deals in China. And it has been declining starting from 2 years ago. So if you look at the chart, we started with 0.7 gigawatts of capacity, right, and then rising by 2.7, rising by 3. And in 2024, across 4 transactions we took, we added 1.1 gigawatts. This year, there were only 3 transactions adding only 0.8 gigawatts. Total is about 9.4 gigawatts. Renewables China contributes about 10% to our entire earnings base, right? So the impact, let's say, if there was curtailment that will hit you by 10%, it will actually only translate into 1% to group earnings. So I just want to put into perspective what this means, right? So what we are acknowledging is that there are headwinds in terms of curtailment and some of that can be near term because the transmission capacity might come in to ease the curtailment. Some of it might be longer term, depending on where they are located. And then there's also pricing reforms. And because of that, we have been very, very careful. And this chart shows you that as early as 2 years ago, we have already started exercising very strong discipline and being very selective. Now our new investments are in net import regions. So in other words, those in 2025, they're all in net import regions, and we also require a higher return spread above our hurdle rate. So across the years, actually, something that we do not disclose publicly, but if you look across 2022, '23, '24, '25, in each one of these years, the spread above hurdle rate for the deals that are done have always been increasing. So right now, the deals in 2025, we are asking for actually very healthy returns that creates a very significant buffer above our hurdle, all right? So just to paint you the picture that there is headwind in China, it forms actually not a very big portion of our earnings base, and we are exercising a lot of caution in terms of extracting value and also future investments. We will continue to take a disciplined approach, as I mentioned, as we monitor the impact of regulatory reforms as well as market developments. This is India. Our Renewables capacity in India has grown from 2.1 gigawatts in 2020 to 6.6 gigawatts currently at a compounded annual growth rate of 28%. The new projects secured across technologies. We have also been awarded hybrid and round-the-clock projects comprising wind, solar, battery, energy storage systems. So we now have 3.3 gigawatts of gross installed capacity with an additional 3.3 gigawatts that are secured or under construction. The projects are expected to be commissioned from 2026 to 2028, providing strong earnings visibility. With a sizable fleet of operating assets and paired with a strong pipeline of growth projects, we have achieved meaningful scale in India. This puts us in a good position to explore capital recycling initiatives to fund future growth as well as to drive value extraction for our portfolio in India. The Integrated Urban Solutions segment showed steady performance on higher land sales and operational efficiency gains in the water business. The Urban business registered stable demand in Vietnam and stronger land sales in Indonesia. During the year, we were awarded 2 new Vietnam, Singapore Industrial Parks projects, bringing the total to 20 parks. The new VSIPs, VSIP Nam Dinh and VSIP Nghe An III will be developed as low-carbon industrial parks and complement our current 18 VSIPs. We now have a leasable portfolio of industrial properties in Vietnam totaling 134,000 square meters with an occupancy of 84% as at the end of June 2025. Since then, we have signed more leases, bringing total occupancy to 91%. Looking ahead, we have a strong pipeline of land bank to grow our recurring income with a further 474,000 square meters of leasable industrial area under development. The Water business has demonstrated resilience, holding firmly its earnings contribution compared to last year. We continue to explore initiatives to grow and optimize our water operations. Separately, as mentioned just now, the sale of SembEnviro was completed in March 2025, and we recognized a net gain of $142 million. Still on Integrated Urban Solutions, LatAm, we wish to highlight is emerging as a prime destination for data centers due to its seamless connectivity to Singapore. It is linked to Singapore as well as other Southeast Asia countries through multiple submarine cables and fiber optic networks. LatAm submarine cable infrastructure is set to strengthen further with the Nongsa-Changi cable and the INSICA cable expected to be operational in 2025 and 2026, respectively. So in June, we signed a letter of affirmation with Panbil Group to collaborate on low-carbon industrial parks in the Batam, Bintan and Karimun region. Together with Panbil, we will jointly develop the Tembesi Innovation District, a 100-hectare low-carbon industrial park in Batam. Tembesi is well positioned to capture growing demand for data centers and other industries, and this leverages our capabilities to provide power, low-carbon energy solutions and water management that are all essential for the customers' operations. Now moving on to decarbonization solutions. We are in exclusive discussions for the import of low-carbon power from Sarawak to Singapore. And we have also signed a preferred supplier agreement with cable supplier, Prysmian for subsea cable design. We also formed a joint venture with Bharat Petroleum Corporation Limited, BPCL of India, to explore renewable energy, green hydrogen and green ammonia projects in India. Net Zero continues to strengthen its capabilities for long-term growth. The business has expanded its regional reach and strengthened its platform integration. We will continue to calibrate our investments in this segment in accordance with market conditions. We'll have Eugene now take you through the financials.

Thank you. Thank you, Kim. I hope you don't mind my somewhat recipe voice. And because of that, I will try to hit the salient points in relation to the financial portion of the presentation. I think if you look at the overall financials, both our turnover and EBITDA declined slightly, right, 8% at the turnover level and about 6% on the EBITDA level. And the decline in the turnover is largely attributed to our Gas and Related Services, where we saw lower in general prices. And also, we had the absence of a contribution from our SembEnviro business, which was completed -- the sale was completed in March of this year. Now this was partially offset obviously by -- while we did see higher gas sales in terms of volumes as well as the new capacity additions for acquisitions and acquisitions in the Renewables segment. I'll talk about this in a little more detail when we look at the net profit. Now in terms of our increases in our associates and JVs, it is largely a result of a contribution of our Senoko Energy acquisition, of which 30% contributed for the full 6 months and an additional 20% contributed for 2 weeks in the month of June. I think in addition to that, the underlying business performance contributed by Urban was also stable. Now all this bring about an adjusted EBITDA, right, which is flat compared to last year. And when we look at our net profit before exceptional items and our DPN FX, we did $491 million, which is slightly higher than last year or largely flat. Now in terms of our DPN FX, which is, as we all know, it is the -- simply the mark-to-market of whatever the balance sheet balance in local currency is relative to the prevailing Indian rupee to Singapore dollar exchange rate on that time. So comparing the exchange rate with what was used to mark the same balance at the end of 31st December, there was a depreciation of the Indian rupee, and that has resulted in a $95 million FX mark-to-market downside compared to a $46 million gain in the previous year. The exceptional item of $140 million, that is the gain from the sale of the SembEnviro business, and that brings us to a net profit of $536 million compared to $543 million last year. And Kim Yin has talked about the high-level points earlier on, where EPS before exceptional items and the DPN FX was about $0.276 and ROE of 17.8% or around 18%. Now this slide is largely talking about the group turnover. So, most of the points have been covered in the previous slide. So I'll just move on to the next slide, which talks about the group net profit. Now from the Gas and Related Services, we did see a fairly steady profit, right, declining by about $9 million year-on-year. Now we did see a positive -- a significant positive contribution from Senoko but it is offset by several factors. Firstly, in 2024 earnings, right, there was -- there were one-off tail gas as well as upstream gas curtailment earnings of about $25 million to $30 million that weren't present in the first half of 2025. In addition, Phu My 3 also contributed a little bit in the first half of 2024. And Phu My 3 contribution is obviously not yet having the concession returned last year. I think in addition to that, we also saw a couple of other factors. Number one, we did see some renewals of the shorter-term 0 to 5 years contract, about approximately about 100 megawatts of that or close to 10% of our generation capacity at lower spreads. So I think if you would recall, these shorter-term contracts are now renewed in a USEP environment that is significantly lower than the highs of when they were contracted, that is 2022 and 2023. So taking that into account and given the performance of the Gas and Related Services business, we do show significant resilience, especially when you look at the broader performance of other Singapore players. Also impacting our earnings is that we have imported higher-priced Malaysian renewable imports that was signed in December of 2024, but this is not expected to persist for long term. As announced in the December of 2024, it's a 2-year contract. So the combination of these factors was offsetting a strong combination from Senoko. The Renewables segment delivered a 27% growth in net profit. And as Kim Yin has highlighted earlier on, the higher profitability is really brought about by full half contribution by projects that are commissioned midway through the second half of last year, and a lot of it is in the fourth quarter of last year. And also, we saw phased commissioning of our Rajasthan solar project in India. Now we also saw higher wind in India, which contributed to a positive to the Renewables net profit. But conversely, we did see some of that growth offset by higher curtailment in China, as Kim Yin has highlighted. Now when we look at the Integrated Urban Solutions, we see stable performance. Vietnam continued to be stable relative to last year. Indonesia did see a stronger performance as well compared to last year. Our Water business in India segment saw a slightly positive improvement as well about $2 million as a result of a cost optimization. So some of you may be asking how much did the [ SembWaste ] contribute to the integrated Urban Solutions. In the first half of 2024, SembWaste contributed $9 million. And in the first half of 2024, SembWaste contributed $11 million. So if you remove the effects of SembWaste, you would see that the IUS segment has performed stably. In our Decarbonization Solutions segment, we saw a slight increase in the cost to $13 million. That is a result of us scaling the development activities as Kim Yin has highlighted in the earlier slide. In terms of other businesses, we saw an increase of $2 million, $21 million relative to $19 million. The improvement in the net profit really came through our specialized -- Sembcorp specialized construction business, which continued to see a strong order book that is coming through from a government-related customer. In terms of corporate costs, it remained flat against last year. At the corporate level, interest cost, we saw a reduction of close to 10%. That is because we saw a lower interest rates, and we were able to refinance some of our debt -- corporate level debt in the first half of this year. And we were also able to issue longer-dated bonds at more competitive interest costs. In terms of our Other Corporate level costs, we are at $46 million this year compared to $38 million last year. And it's largely commensurate because in last year's $38 million, there was a $9 million ECL reversal as a result of receiving dividends from our coal plant Songzao, which no longer exists in Sembcorp after its disposal was completed in December of 2024. The DPN income that we -- before the effects of the FX mark-to-market of the balances on the balance sheet was $65 million compared to $82 million. As guided before, we will expect our DPN income to continue to reduce and to come down simply because we will be collecting the principal through the repayment from cash flows. And to date, in total, since we have completed the transaction, we have collected $928 million in cash flows via the DPN. And then we have talked about the DPN FX gain loss as well as the exceptional items in the earlier slide. If we move on to the next slide. Now this is a slide where I would just want to indicate a macro development in the market that has impacted us. I think in the first half of this year, particularly after Liberation Day, as you can see in all the cross the Sing dollar versus our key overseas earnings currencies exposure, quite evidently, the Sing dollar appreciated against all our key currencies, in fact, against most major currencies. So when we look at the currency effect, where we saw the -- our overseas currencies, local currencies depreciate anywhere between 2% to 6% against the Sing dollar, that has brought about a $23 million of earnings translation impact, right? Now this impact, I'm calling it out because it's not something that you see in the P&L in itself because the P&L capture transaction realized and unrealized gains or losses, which is -- remain stable because we hedge those, right? Now this is really a translation effect of which it cannot be hedged. So it is important for us to call it out because in the absence of this FX effect, right, without the impact of the $23 million, which comes about from the translation, our earnings half-on-half would have seen a 5% to 6% increase instead. So this is something to take note and something to note for the second half of the year. Now you move to the next slide. Now this is really to emphasize the defensiveness of our earnings as well as collect cash flows of our business portfolio. Now it's instructive to note that 88% of our group net profit as well as the cash flows comes from investment-grade markets. And this contributes to very defensive earnings to Sembcorp with Singapore contributing to half of the group net profit. And this defensive nature of our business and cash flows, which you will see in the subsequent slide, will underpin our stable dividend with a potential for growth going forward. Now I will not talk about the net profit bridge because most of the elements were already discussed earlier. But if we move to the next slide, in terms of our first half capital deployment outcome, in the first half, in total, between capital expenditure spending as well as equity investment, we deployed a total of $567 million. This is a reduction compared to $1 billion over the same period last year. The bulk of the capital deployment is in Renewables as we continue to execute the pipeline. And also in Gas and Related Services as we continue to work to complete with the target of commissioning of CCP IV, which is our H-class, which will come online sometime in 2026. If we move to the next slide. In terms of our group free cash flows, it remains strong. Cash flow from operating activities was $672 million compared to $517 million last year. And taking into account of our divestments, the dividends as well as interest income, our DPN receipts and netting away investments in CapEx and adding back the nature of the CapEx that is of a growth perspective, our free cash flow, which is available for both debt repayment, funding new growth and the dividends stands at $1.3 billion compared to $927 million last year. Now granted in the $1.3 billion of free cash flow, it does capture the net cash inflow of about $383 million from the sale of SembEnviro. But adjusting from that -- for that, our free cash flow for the first half of 2025 is still commensurate with first half of 2024 at $930 million, so showing the resiliency of our cash flow generation. And so from a group borrowings and balance sheet standpoint, in the first half of this year, we saw a deleveraging of the balance sheet. our net debt reduced by slightly over $400 million from $7.8 billion to -- well, just under $7.4 billion. And in a commensurate fashion, you see our leverage ratios improved as well. More of interest will be our net debt to adjusted EBITDA coming down from 3.8x to 3.6x. Now one point to note is that our total equity did reduce slightly. And this is a result of a foreign currency translation reserve because, as I mentioned earlier on, the Sing dollar strengthened against all our overseas currencies. So that resulted in a $330 million impact against equity translation. But in spite of that, even when you look at a net debt-to-equity perspective, the ratio improved from 1.36x as of December 31, 2024, to 1.34x as of June this year. So when we look at our group debt profile, compared -- as mentioned earlier on, we continue to focus at pushing out our maturities. I think if you look at our debt maturity profile right now, the bulk of our debt has been pushed on in maturity after 5 years. In terms of the source of the source of borrowing, it remains very balanced across green and sustainability-linked borrowings, corporate debt as well as project finance debt. We remain hedged at close to 81% fixed rate against 19% of floating. Our weighted average cost of debt also as a result of the interest savings at the corporate level came down from 4.6% to 4.5%. Part of it, it's helped by the strong outcome of our 20.5-year long-term bond issuance at 3.55%. Our weighted average debt maturity declined slightly from 5.1 years to 4.9 years. This is a result of continued debt amortization as well, resulting in a reduction in our net debt. From a liquidity standpoint, we remain having a significant amount of committed on-demand liquidity, right? While you see many numbers on the slide, it is important to note that the combination of our cash and cash equivalents as of 30th of June 2025 and our unutilized committed facilities stand at $3.5 billion. So we still have a $3.5 billion of on-demand liquidity that we could readily draw on to deploy for growth. So I will complete this by talking about our outlook. Now our outlook, essentially, we are saying that we show a strong and resilient performance in the first half of 2025 in spite of the macro uncertainties, right? Our contribution from the Gas and Related Services segment was steady despite having -- seeing a lower wholesale prices in the Singapore market and also not having the contribution from Phu My 3 in Vietnam. And a lot of this resiliency was also supported by the contribution from Senoko Energy. Our Renewables segment saw stronger performance in India, right, and also general the commissioning of projects. And this is offset by lower earnings in China. And our Integrated Urban Solutions saw steady performance with higher urban land sales and also operational efficiency gains in the Water business, as I mentioned earlier on, right? And this is, of course, offset by lower SembEnviro contribution given our divestment in March of 2025. Now looking towards into the second half, we do expect our Gas and Related Services segment earnings to remain resilient despite the lower spreads of some of the contracts renewed since the second half of 2024. Now in the U.K., we could face the possibility of some customer demand reduction as a result of the closure of the SABIC ethylene cracker facility in Wilton. Now the earnings for the Renewables segment is expected typically, right, seasonally to be lower in the second half of the year and also a possibility of a continued higher curtailment and lower tariffs in China compared to 2024. But this is expected to be offset by new project contributions. Now for the Integrated Urban Solutions segment, we expect to be stable in the second half of 2025, of course, excluding the contributions from the divested SembEnviro in the first half of 2025. But we do remain watchful of any potential impact on our land sales in Vietnam, particularly with arising from the economic implications of the trade tariffs. So we continue to monitor, right, the macroeconomic developments, including shifts in any of the investment sentiments and particularly in relation to the strengthening of the Singapore dollar against our major currencies, which may ultimately impact our reported business performance. But we just want to highlight this. The defensiveness of our portfolio will continue to underpin the resilience of our earnings and also the cash flows, as you can see, backed by a strengthening balance sheet. So we expect to maintain a sustainable dividend payout in 2024 that is commensurate with our underlying earnings and in line with our dividend policies, right? So the group remains -- we remain committed to capturing the market opportunities and to build a resilience in our business and also creating long-term value in our sustainable energy transition strategy. So that ends my presentation, and we are open for Q&A. Sorry if you didn't find my voice particularly suiting.

Before we go to Q&A, I just want to -- Eugene has taken you through the recent developments. You see that the balance sheet actually has deleveraged. It's actually -- and we have -- the cash flow profile has been very strong, all right? So that has given us the confidence to say the underlying portfolio is very defensive and very resilient. And that's why the Board said, let's increase the dividend by 50%. 2024, first half was $0.06. This season is $0.09, right? Of course, the full year in 2024 was $0.23. Looking at the trajectory, frankly, we are actually very, very confident that, that level could well be maintained, yes. So that's the first point. And again, underpinned by the strong portfolio and the balance sheet. And the other part of it is I want to draw your attention back to part of my presentation where we talk about each of the business segments, right? They all come with some near-term upsides that is within our reach. So in the Gas and Related Services, Senoko synergies, those things are well within our reach. We can do refinancing. We are already actively integrating the trading operations, the operating portfolio and so on. Some of the things that we spoke about in the past now is in motion. That's within our reach. Then in the case of Renewables, we're talking about capital recycling, right? 5 years ago, when I came to this company, you asked me about capital recycling, I said, look, I got nothing to recycle. But today, it's mature, 3.3 gigawatts of operating assets, 3.3 gigawatts of secured or under construction growth. Such a portfolio, if you compare to the other listed portfolios in India, you will be able to see the quality of it, right? And we are not even including in that narrative the whatever pipeline that other companies tend to sell. If we throw that in, there will be 10 gigs easily, right? So it is -- and the market conditions seems to be conducive, right? But market conditions changes every day, right? Until 2 days ago, we thought India was 25% tariff and then sudden became 50%. So how is it going to impact the market sentiment is something that is -- we have to watch. But on our part, the portfolio is ready. The portfolio is mature. The portfolio is attractive, right? So that's within our reach. So that's Renewables. And then when it comes to Integrated Urban solutions, we show you Batam, some near-term catalysts literally within our reach. This is just 50 kilometers away and the fiber cables are being built by people at Senoko, right? So those are not going away. The moment the fibers are built, you will see the data centers and you will see the demand, right? And we have a project, we have a partner, we have land, that is approved and ready to sell. So there are near-term catalysts, strong dividend, strong balance sheet. So it's a safe bet with some upside. In the current environment, I would like to think that we are actually very attractive. The other thing about the Sing dollar, we -- Eugene is CFO, right? So he always one thing to first tell you the bad news. Yes, when it translates back into Singapore dollars, our earnings -- overseas earnings becomes smaller in Sing dollar terms. But this is also then the season with a strong Sing dollar to go out there to do shopping, right? So a strong balance sheet, strong cash flow, strong Sing dollar, this is a shopping season. Anyway, I can't tell you a lot about what is being cooked, but there are opportunities out there, and we are very well positioned to capture some of those opportunities. So I just want to put things into perspective despite the formality of having to read through all the results and all that to you. But I think putting that into perspective, it's a safe bet with dividend confidence, and it comes with near-term upsides that you can well within reach and also longer-term upsides when it comes to potential acquisition opportunities, all right? So those are the things I want to leave you before we launch into Q&A. So Jin, please.

Thank you, Kim and Eugene. We've now come to our Q&A session. [Operator Instructions] Zhiwei has the mic already.

Zhiwei from Macquarie. I have 3 questions. If you could just go back into Slide 16, where you have the net profit for the various segments shown. Yes. So if you look at first half '24, that had the downside of a maintenance shutdown, which had a $50 million contribution, right? So if you were to add that back and net out the one-off gas sales you said will happen in first half '24, you're looking at about a $365 million baseline number. Now in first half '25, you had the benefit of Senoko. It's maybe you say $30 million. So you're looking at a delta of $300 million in first half '25 versus $365 million in first half '24. How much of that difference can be explained away by the recontracting of the lower spark spreads, the higher import costs and then your resilient gas earnings?

Okay. So I will put it this way, right? When we take away the effects that you talk about, right, which is essentially contribution of Senoko in the first half of 2025 and also the one-off effects and then when we adjusted back the MI effects in the first half of 2024. Like-for-like from the first half of '24 coming in the first half of '25, our Singapore, the effects of the combination of the expensive electricity that we brought in from Malaysia as well as the recontracting of that roughly 10% of the portfolio saw a like-for-like decline of about 10%, okay, just over 10%, okay? Now I think it's important to recognize the resiliency of -- on a like-for-like basis in light of the macro environment. I think you would -- well, if you look at the other market players in the same period, you will be able to see what the impact are. And then also when the -- recontracting of that 10% of the portfolio that took place, these are contracts that were signed in 2022, 2023, right? So although year-on-year basis, comparing first half of this year with first half of last year, USEP dropped close to 40%, right? But when you compare that to the average of contracts that were signed in 2023, 2024, USEP actually dropped close to 60% whereas on a like-for-like perspective, our Sing portfolio dropped just over 10%. So I think that shows the resilience of our contracting strategy. So instead of going to the details of those, but just to characterize it that way for you.

If I may also -- the way I think about it, I mean, it's much more quant, about 2/3, 1/3 -- about only 1/3 is the effect of the recontracting. The onetime things, nonrecurring things are about 2/3, the effect, if I have to think about it that way, right? So Senoko acquisition is, of course, you buy an asset that has recurring earnings and some of the onetime things. Today, if you ask me, I wish we never did the import deal in Malaysia, but it weighs us down for a couple of years, but I think it's -- there are also certain good things coming out of it because it allows us then to be -- we are the only ones, right? So you pay the price, but you then be in the best position to then understand where your customer is, who they are, how much they need, how much they're willing to pay. So now we have a very, very clear idea what can be sold and what cannot be sold. So that, I think, bodes well for us in the future. So it's a little bit of tuition fee, but it's okay. It's -- the good thing is it doesn't recur.

I appreciate it. One follow-up on the first question. I believe the delta I described is about 20%. If I understood, you've described about 10% of the delta. So what's the remaining 10% due to?

20%.

So $365 million to $300 million is about 20%, 18%, you want to be precise?

I think you're looking at the whole of the Gas and Related Services segment. So the -- what I was describing was more Singapore like-for-like. So the other elements was obviously Phu My 3 as well. Yes. So Phu My 3 contributed in -- still in the first half of 2024, and it doesn't contribute anymore now. We saw a slightly longer MI that impacted a little bit of our first half earnings this year.

Okay. Understood. Second question, and then I'll just go in a third question as well. You mentioned that the Singapore plants will have a maintenance of about 5 weeks in second half of '25. You said limited impact. However, if we were to think about the maintenance last year, which was 60 days and $50 million impact, why do you say limited impact? Should I go on the third question first?

No, we can talk about this one first. I think the difference is that for this particular one, we were able to obtain the necessary CFDs as well as the tolls also supported by Senoko, some of the backup units in Senoko. And as a result, we don't have the same impact as the MI last year, where we have to purchase the CFDs at a slightly higher cost.

Got it. Last question is on Vietnam Renewables. How do we think about the probabilities, likelihoods or outcomes if negotiations don't go the way you want, right? I believe your tariffs versus the ones that the government is proposing is lower by 30%, 40%. So if the worst case happens, how do we think about that at the end of next year's full year briefing?

First, it is relative, right? It cuts across the whole industry. The latest that we hear from Vietnam is that it is actually -- they have already heard the voices and they will come out with a solution that is much more calibrated, much more. So the likelihood of the worst happening is not very big. Then second thing is that if it does happen, Vietnam represents a very small part of the portfolio, right? So in fact, I drew your attention earlier to the China curtailment and where the industry is because that's 10% of our earnings base. But even then because of the diversification, we think we don't like it, but it will be something that we can deal with compensating and offsetting from other markets. Vietnam is actually very, very small. So I wouldn't be worried about that at this stage. Alex, do you want to comment on that? Is there anything that's out there in the public domain that you can talk about? Alex looks after Global East, so all China, Southeast Asia%.

I agree with Kim Yin. I mean, based on the discussions that we had with various government agencies in Vietnam as well as the intelligence that we get through the [indiscernible], I think the final outcome is going to be a little bit more benign than what some people were expecting a couple of months ago. So I think some good traction.

Next, Rahul.

Rahul Bhatia from HSBC. Two questions. First, going back to Singapore power market. Can you help us with some insights on how you're thinking about Singapore gas market for your assets leading up to the new 600-megawatt plant? Today, you have a bit more than 700 megawatts of contracted capacity. Assuming spreads remain where they are today, are you thinking of adding more PPAs or thinking about retiring some old plants? And interestingly, from disclosed data versus 2024, it appears that your contracted capacity in Singapore has actually reduced by 20 megawatts. Is it more because of you're not -- because the current available spreads mean that you're not adding more PPAs or recontracting the existing ones? Or it's just that the competition is too high? That's my first question.

Now to answer the second question, our contracted position actually went up, right? So our -- I've always said that our net generation capacity is about 900, right? So then with the addition of the recently announced PPAs, that Kim Yin has talked about earlier on, about 120 megawatts. So I think in general, our base generation capacity with the contracts has gone up to about 960. So actually it has improved -- has increased slightly, okay? Now in terms of the general Singapore power market...

I was going to ask Chiap Khiong to comment a little bit in terms of the strategy and specifically how -- I think this is an opportunity to talk about how we would do the integration or that's probably not the right word to use, but how we work together with Senoko to manage the portfolio moving forward because there's a significant difference. We're talking about 2,000 megawatt portfolio, double the size of what we had. And now with the opportunity to work with them. And so that's why back to Zhiwei's question just now the -- was Zhiwei's question, we are able to -- the MI impact as opposed to earlier when you don't have generating capacity, you just forced to go to the market and the other guys are all watching you. You're just going to get not a very good deal, but now we have leverage, right? So how do we do that in the whole thing. But the numbers that Rahul was talking about just now, maybe we have to take it offline to reconcile a little bit how you added up the numbers that he can conclude that actually it's lower. Actually, we believe it is higher. Maybe we reconcile it offline.

Thanks, Kim Yin. Rahul, I think with Senoko coming in, especially 50% in June, it gives us a really different perspective of running the assets. When we were 30%, we were still 2 companies. But with 50% itself, we got approval to actually look at it as a whole. So maybe starting off with contracting first. So from contracting in the past, you have Senoko, you have Sembcorp. As you know, Sembcorp has a lot more experience in doing long-term contracts because of all the rest of the things that we have, the green energy, the customer link and all those things. So we are actually doing more contracting or trying to get more contracts on a long-term basis. And we do not need to just worry about what Sembcorp has as a power plant, but as a whole, Sembcorp and Senoko have as the whole assets. Kim is right, we -- in the past, when we are alone, we are very, very worried to contract too high because if we trip the market, we will watch this exposure and really sometimes the wholesale price will go crazy. With a bigger portfolio itself, we will definitely chase more contracts because then we can actually spread out against more assets that we have. So from a contracting point of view, we'll go longer and we'll go more. From asset optimization, it's also quite interesting because in the past, when we were running assets, both sides need to protect the assets. So both will run in a suboptimal manner, usually what we call minimum stable loads. Why? Because if you trip, you can actually respond to your plant quite quickly. With the combination itself, we can then look at all the contracts, the hit rate on all our machines that we are available from Sembcorp and Senoko and actually optimize the hit rate as much as possible, which means some units may not be running, and we will push the other units to run as hard as possible. So increasing the spread subsequently. So I think with Senoko, it's not just an acquisition, but really it's a combination of activities that we are looking at from a contracting point of view, from operation optimization point of view, and that gives the synergies that we are all talking about. So I hope I answered your question.

So contracting, so today, in the past, when we sign a contract, if the plant is down, I'm still going back to Zhiwei's question on the outage. So when the plant is down, then you are unable to fulfill your contractual obligations. You have to go to the market to buy, right? And because the other GENCO's also know, I mean, a very small market that you are buying because you have to cover your contract position, they have negotiating leverage. But today, with Senoko next to us, if we contract aggressively and even with the outage unplanned, we can always call upon Senoko's plant that caps our exposure. I don't need to -- my bargaining power in the market in a small market has just day and night, right? Because they know that if they don't contract with me, I will run the unit, the older unit, the standby unit in Senoko, which they are otherwise not running. So from Senoko's perspective, I'm not taking advantage of my partner, right? But it is a win-win for both. They get to run a unit that otherwise don't be running and make some revenue, then we -- our contract position is covered without having to go to the market to buy. So simple things like that, there's a win-win for everybody. And then even from the customer's perspective, from the regulator perspective, this prevents a spike in the market price due to an unplanned event, which reduces volatility, reduces high prices for consumers. So everybody is happy about it. So all these are things that just one example of what we can do when we work together with Senoko, which things that we otherwise in the past, we don't have. Now then coming back to what Chiap Khiong was talking about, then it allows us to go out there to contract much more aggressively. So this now to Rahul's point. So you would -- to the extent the market conditions are conducive. We're not going to go out -- when I say contract aggressively, I'm not going to go out there to contract and depress and have destructive competition with other guys trying to contract. We will -- we are the largest guy now. We are -- we are Saudi Arabia in oligopoly, we need to hold up the margins. So we will be calibrated in how we do. But aggressively, meaning we no longer have to watch our back. We no longer have to worry that we're constrained by my installed capacity of 1,000 megawatts. Now I've got a bigger fleet of plan. I can aggressively go out there and chase after my customers. If they come along and say, I want 5 years at this rate, starting from 2026, are you able to fulfill -- no problem. Please come and talk, right? Earlier, we were saying, let's go and talk to the operating guys, is your plan able to -- do you have a planned outage in 2027 that now just go out there and sign up, we will be able to cover it one way or another. We have 3,000 megawatts at our disposal.

Maybe just add a few more points. Now we have a whole fleet of baseload older machines and batteries as well. So it's actually a very unique position that we are having a whole range of machines that you can actually optimize. One other thing to add is also we have gas that now not just producing -- supply gas to our own fleet, but also potentially to Senoko as well. So you've got a whole activities from gas to power plant, whole fleet of assets that we have from newer plants to older plants and battery. And the other unique thing for us is also we are into the solar space and the renewable and also decarbonization space. And that's where it helps us to build confidence for energy transition with partners and our customers. So that can also help Senoko build the pipeline of contracts. So I think we are in quite good unique position.

So let's say, if we are trying to import power from a neighboring country, right? And we want to import green power, if it is solar or whatever. However, reliable, there will still be interruptions from time to time. We can cover the interruption with our own fleets of power plants. We don't need to go out there and back someone else to provide insurance or emergency cover for us. The Senoko portfolio gives us all that. So today, if there's an opportunity to import power from overseas, be it green power or otherwise, we are in a very -- no one else even comes close to the ability to -- and the confidence to say that I can just do this without having to -- this problem, that problem, the intermittency, emergency backup. We got it all in the portfolio just in Singapore. So...

Rahul, just to clarify your question. Your question is why did the more than 10 years decline the percentage? Was that your question?

Yes. In the operational data release, we have data 713 megawatts for 1H 2025. 2024, it was around 730 megawatt for Singapore Cogen.

In terms of the...

The contracted capacity. It just says contracted capacity.

Okay. Maybe we take this offline because...

Rahul, sometimes we also don't run the machine and buy back if it's cheaper. So the flexibility is to produce, the flexibility to buy back. And if you buy back, we got excess gas, we also can sell the gas. So the optionality, don't just look at the generation contracting level and sometimes we do some of this.

Let's reconcile the numbers offline because we're not reading from the same page...

We're not reading the same page, yes.

Second question is about -- on this slide, Renewables, we have profit growth of 27%. If we take out the contribution from new assets, what are the underlying trends?

Okay. If we take out the contribution from the new earnings, the underlying is slightly down, right? That's the result of the continuing curtailment from China, yes.

I assume India would be up, right?

India is up because we have a higher win for India. So net-net, India is slightly up, but Southeast Asia is about the same. But then China is down because first half curtailment in China is higher than the first half in 2024.

Pei Hwa Ho from DBS. I just have 2 questions. One is the follow-up on the gas segment. In the slide, it shows that the 5-year contract, it's still about 13%. Possible to share with us what is the renewal -- the split like this year and next year for this shorter-term contract?

Yes. I think in terms of the shorter-term contracts for the 13%, as I mentioned earlier on, the good thing is that the higher-priced contracts in 2022 and 2023 are all -- have all been renewed. In general, in the second half of 2025, we don't see a lot of renewals, and we'll probably see a little bit of a renewal in 2026, probably about 3% or so, right? But of course, in the Senoko portfolio, we are contracted all the way into 2026. We will also see renewals in the Senoko portfolio, part of it coming through in the second half of 2026.

Okay. Secondly is on Renewables -- because you mentioned about the curtailment in China and there's a change in also like maybe our tariff outlook for China and Vietnam renewable. So based on our current assessment, how should we think about the -- maybe the risk of the asset impairment given maybe there's a change in the cash flow projection forward.

I think the -- as I mentioned just now for Vietnam, based on the latest that we heard, the government would -- is where the impact if they do something so drastic on all the investors, right? So for investor sentiments, they do rely on foreign investments for growth. We are cautiously optimistic that they would be very calibrated, that's Vietnam. China, the outlook on the pricing reforms because right now, it's only implemented in a small part. It hasn't crossed to the other places in which most of the places that we operate in. So it's a bit hard to tell, right? The only thing you would rely on at the end of the day is the demand supply balance in the region in which you have your plant in the -- who is the marginal plant that is setting price and so on, right? And of course, it's constantly being updated by the building out of the national power grid, then because the moment your localized grid, you know that this is a marginal plant. If they bring in a transmission from neighboring province that has a cheaper option, then suddenly your demand-supply balance might shift and then the price setting might be different. So I guess I say a whole lot of that, but at the end of the day, I'm saying nothing, frankly, because I don't know. So asset impairment hopefully, because of where we are, most of our assets are in the net import regions, are in the better demand supply provinces. So we are hoping that we think the impact would be less than what other people would face. But we do have 1 or 2 projects in the Northwest. Those are -- you will be seeing that -- it's quite a stark difference between those and the coastal. And the Northwest ones, then it's a matter of when the transmission will come in and where is it taking it to and so on. So without -- I can't give you -- I really can't answer that question because I can't tell China is too big, right? And every time you say that, this transmission line versus this transmission, somebody else will come up with another dimension that you are -- that comes from the site. I don't want to say blind siding, but it's big enough and the dynamic enough in terms of decision-making is very difficult to predict. So we are watching. I think what we can tell you is that to reassure you that we're watching that very closely. And that's why last year -- end of last year, we actually made an ECL provision, right, for our China receivables, right? So to the extent it is prudent and necessary, we will be making the relevant adjustments and keep you informed, right? But we are taking actually quite a conservative stance when we look at these things, relative to -- maybe I shouldn't say relative, but it's actually quite a conservative stance. So not answering your question, but I can only tell you that we will -- we take conservative stance, and then we'll let you know as soon as if there is any important developments. But so far, it is more the curtailment that one could -- some argue it is temporary, some argue it is -- it might last longer. They are debating about how long the demand-supply balance will catch up. So it's a matter of how long it's not a matter of permanent. That's on the curtailment. On pricing reforms, those can be permanent. But like I say, I can't tell. It's different locations, they do it differently, right? And sometimes even when there's announced policy, the provincial government would impose their own additional rules, China [indiscernible] on the thing. Some are good, some are not -- most of the time not so good. So we will have to look at it case by case. So sorry, could I answer your question? Frankly, I also don't know. But...

Maybe just to clarify one point to add to what you mean. In Vietnam specifically, okay, the tariff issues is really in the JV, the -- roughly 100 megawatt of [indiscernible]. The Guangxi portfolio that we acquired did not face any form of the CCA issue. So that one -- the one tariff is completely fine. So just to be clear, it's not the entire of Vietnam that is facing a tariff issue.

Sorry, if I may, because emphatically, you couldn't see. So apologies.

I got just 5 questions. Thanks for telling us what's the catalyst in the near term, Kim. Just looking at your wording that you use for gas, you said that it's resilient. So we can expect that whatever that we have seen in the first half this year for gas, for gas, it's not a normal run rate because you will still have to actually consolidate or rather higher percentage contribution from Senoko, firstly, and also the synergies and financing that you are working on. So we can't use first half as a normal run rate, right, for gas? Just want to confirm that since you use resilient.

Yes. We expect the second half to see, obviously, 20% coming in for the full half contribution and the synergies I think to come in as well. So you're right, it's -- when we say resilient, the first half doesn't reflect the second half run rate, yes.

Okay. And then because you call out the Sing dollar translation, the $23 million and you say that if we had not had that, your group profit would have been gone up by 5% to 6%. That is separate from your DPN ForEx, right?

Absolutely separate.

So where would this $23 million translate into right now?

The reason why I call it out is because it doesn't from an accounting perspective, it doesn't come up because the reality is you are looking at your local currency net profit multiplied by your average rate. Sorry, I'm just talking about technical accounting here, right? So you're just taking your first half, call it, rupee net profit multiplied by the average rate of your first half. And then that will be translated and consolidated into your Sing dollar books, right? So if the average rate is 6% lower than last year, it simply means that, that impact will be in there. But unfortunately, it doesn't capture -- it's not captured in the statements. So I have to call it out so that you would see the impact of that, right? Of course, the balance sheet translation, you will see it flow through the foreign currency translation reserve. So you see the $330 million.

Just still on my second question. So on DPN, so if we assume that the Sing dollar rate is as is right now, how would actually swing the DPN ForEx in the second half?

If -- for now, in the second half, if the INR Sing dollar doesn't change, right, then there would -- then the full year loss on the DPN FX will be 95. So in the second half, there will be no further impact. Now if in the second half, the Indian rupee appreciates against Sing dollar, then in the second half, there will be a positive, okay, DPN FX. Then, of course, for the full year, then you have to add the 2. But then if it goes -- depreciate some more, then there will be a further negative in the DPN FX.

Got it. Just on renewable from Malaysia, Kim Yin, you said that, that's one-off, but the contract is 2 years, isn't it recurring? And how do you actually sell if you have imported at high cost, who would take up?

[ Friend ] not here. No, yes, one-off for 2 years, okay, short answer, it's not something that you can expect to keep on coming and weigh us down forever. How do we sell? You negotiate hard. And then at some point, if people don't want to take, you might have to offload and take some of the losses. So that's the honest truth. But like I said, that's an insurance fee that we pay. And then now we know exactly what is the threshold of paying for ourselves as well as for our customers for green, right? And of course, green sentiments, season to season, the treasure is a bit different. So -- but it is something that I think if you ask me, I wish you never do, but having done it, it's something that now we learn something from it.

So that means in the longer term, we used to talk about the huge import. So we might stall on that?

No. It wouldn't because there are a lot of complications because this one is coming from Malaysia. So then some of the customers are saying Malaysia [ racks ] compared to Singapore racks, Singapore are better, right? So for us to build up the Singapore, the crunch that I mentioned just now, those are still highly sought after. And those continue to support our -- also our brown -- our Gas business.

I'm talking about the future big imports from Malaysia that.

Yes. No. So that's why you have to be careful. So the next guy that comes and sells your Malaysia import, you better make sure that your customer is lined up to buy it, right? So whether it's Indonesia, whether it's Vietnam, it's something that has to be the greenness of it, there are many sheets, let's put it that way, many shades of green.

Just my last 2 questions just on recycling of RE assets. Are we looking at in second half this year? And are we looking at recycling the India assets?

We are talking specifically India portfolio just now, right?

I don't know because you just mentioned the RE portfolio. Was it just specifically for India that you're looking for monetizing?

It is mature to consider for India.

So is that second half that you're looking at?

I think [ Siew Khee ], we are evaluating it. So we will let the market know at the right time, obviously.

And then also finally, on your shopping spring, what's the size that you're looking at and where?

Well, we -- it will have to be in the regions that is within our existing spend. It won't be in Africa. I can tell you where it won't be. You give me eye on me. It won't be in the Americas, right? It won't be in Africa. it won't be in Central Asia. I can only tell you that this is a bit sensitive, I'm sorry, but the Sing dollar is strong. There are good opportunities that are out there because while our balance sheet, we delevered somewhat and we continue to enjoy from the cash flows, many players out there are actually suffering. Even without interest rates going up, they are suffering. For whatever reason, you can go and big, but there are weaknesses. So when the tide recedes, then the people who are less spending, wearing their trousers, you benefit. Sorry, I can't tell you because I think that you talk to so many players, you will know we won't be something that we can disclose at this stage. But there are enough sizable opportunities. You asked about size. Today, we are growing into a $1 billion profit company. I won't be touting this if it's not in the $100 million range of additional, right? If it's going to contribute $10 million, I tell you it's a shopping spree. So from $1 billion become 1.0, I won't be able to face you when it actually happens. That you have to be in the $100 million range type things. Those are the type of things that we hope we can get. Sorry.

So Kim Yin, just a question around more portfolio level question over the next few years, correct? If you think about your portfolio now across all geographies, China still has about 20% of your assets, while Middle East is in single digit. Do you think that reverses? And if you look at in terms of capital allocation now, I think U.K. is still struggling. And in terms of -- I think this is a question for, I think, Eugene. In terms of receivables on China, how much is left? I think the final question on Singapore was more in terms of those 5- to 10-year contracts. Have you started to see incoming from your customers saying to let' press it on the table and renegotiate considering spark spreads have come down?

Receivables Yes, just to answer the easy one, SGD 370 million for China subsidy receivables as you exposed.

Yin, has it come down second half versus first half or it's gone up?

No, it's not come down. It's gone up slightly.

It's gone up slightly. So in terms of the portfolio because you can see, as I mentioned just now, China, we have been very disciplined. And relative to other geographies, you see us doing a lot of India. We are increasingly doing more in the Middle East, right? And Southeast Asia continues to be at the same similar pace. So the portfolio shift will definitely shift given where we are adding things, right? If indeed, we were to do a capital recycling in India, then that you will see a onetime dip in the India side of the portfolio. I don't know whether I'm answering your question when you're thinking about it. But I think the -- directionally, the Asia Pacific area is still where we hunt. Again, like I told, Siew Khee, just now, you won't see us venturing into Africa anytime soon or the Americas. We don't.

That's more focused on Middle East?

Yes, Middle East.

Because there is so much going on there. I thought that is that something that you are really thinking about going forward.

We are hunting actively. We have a team -- people was here yesterday. He has gone back. Otherwise, I'll get him to speak to you. He is actively chasing. There are quite a few projects that are being chased -- now having said that, the -- many of those projects are greenfield in nature. They are big, they are greenfield. So contribution will come only after the construction. So the portfolio shifting into Middle East, unless we make sizable acquisitions, you won't see that in the next year or 2. That's the truth, I think, unless there is a major acquisition that allows us to have -- to add contribution from the Middle East in the meantime, we think the greenfield ones are big and much more visible because those are bids and we've got good partners. We've got good EPC contractors that work with us. Some of those will come through just like Manah in Oman. And we have a very good position in both UAE and Oman, right? And Saudi Arabia, big projects are coming. So without naming names and being specific about it, yes, there will be more in the Middle East. We will shoot many bullets and then some of them will hit. Greenfields will come a bit later, but it will still be within our -- because some are Renewables, right? Renewables, if you do now, if you win it now, you might see contribution in 2028, 2027, yes. But it is gas-fired power, it might take a little bit longer. But those are the big projects are there. So the weight is shipping West in terms of new investments this season, with shifting West. I hope that gives some color to your question.

I think just the last question on Singapore.

Singapore, can you remind me? Spark spreads renegotiation for short-term contracts, yes. As the capacity additions come into the Singapore market, right, this is something that we have always expected. The short-term contract spark spreads will be weaker.

I was thinking about the 5- to 10-year contracts.

5- to 10-year contracts?

Are they coming to the table and renegotiating them with you and again, saying that time to relook considering what we signed earlier versus what we want to kind of look.

No, no. I think the moment they have entered into contracts, at least this environment, people honor their contracts and the quality of our customers are all good people like DBS and Morgan Stanley and so we don't have -- I mean, in some places, in some parts of the world, people will come to you and say, sorry, our times are bad, the contract. But no, not in Singapore. For the same reason, if we sign a bad contract with the owner, -- and that's why I was -- Siew Khee was asking about the Malaysian import -- so we dip our toes into the water and then it was hotter than we thought. But luckily, we didn't expose ourselves too much into it. Sorry...

My name is [ Rachel ], and I am from UBS. My question relates to India Renewables. There was a Reuters article out on 1st August that -- saying that there are some 50 gigawatts of stranded projects, i.e., tendered projects that have been won but yet to sign PPAs due to insufficient transmission lines or infrastructure buildup. The article called out Sembcorp specifically as having tendered projects that are stranded. Could you comment on that? And on the longer term, given that what we've seen in, for example, Vietnam, how do you intend to mitigate against these kind of things that you're seeing?

Okay. First, stranding is if you have invested significantly, then you stranded right? So the way we develop projects in India, we will not make significant commitments until the PPA is signed. That's number one, right? So there's no such concept of stranding. Second thing is that actually, about half the capacity that we have been awarded. So you bid, you win, they give you a letter of award. Then they will take a little bit of time to go and sign the PPAs with the downstream and then they will come back. The meaning the SECI, then they will come back and then sign the PPAs with us. So about half of our capacity already signed PPAs. Then the other half of it, if they were won in competitive tenders, the prices are actually quite competitive. So it is a matter of them being able to sell it down and also some of the cases is waiting for transmission. So then we actually have -- it's actually the other way around. We have the option now to say, I don't extend because I have got land, I've got connectivity. I'm not going to hold my project for you if you're not going to come to the table because India is a big place. If you cannot sign the PPA with me, beyond the deadline, I'll move on, right? So what that means is also then the -- what we have actually secured along the way as a portfolio are some connectivity. That means options on land that has got transmission ready so that then if we win the bid, signs the PPA immediately, we can buy equipment and put it on to the land without waiting for transmission. So that land with connectivity is actually our strength, right? Some seasons ago, sitting here, we were talking about us procuring land as the strategy in India IPP, that's security. So now this land becomes -- if they -- if we want to bid, we will hold it for them for a while. But beyond that, we will actually move on and apply the connected land to some other project that is real, right? So I want to say, first, again, no stranding. Second, they were all competitively priced. And they were one in competitive tenders. And because of that, the pricing should be quite competitive. And we are ready to use the land to build something else if they don't come and sign.

So can I just confirm that when you said that you have no stranded assets, means that the article is to a certain extent, incorrect?

Yes. Emphatically, Yes. There's a lot of people who want to sell paper.

Next question, Horng Han.

Horng Han from CLSA. I have a few questions. The first is with regards to the impact of the portfolio recontracted. I understand there's a 10% decline at the gas profit level. As a result, 10% of the portfolio has been recontracted. So in other words, 10% recontraction perhaps translates to a $30 million kind of a decline in earnings. So the question I have here is that the recontract, was it -- did it take place beginning of this year? Or was it progressively throughout the 6 months period?

No, the recontracting, there were 2 effects, right? One is we have recontracted these short-term contracts through the second half of last year as well. So you obviously have the impact of those. And then there were some contracts that were also contracted somewhat progressively through the first half of 2025 as well. So it's a combination of these 2 contracts that were recontracted in 2020 -- second half of 2024. And therefore, you see a full half impact of those. And then there were some that were recontracted in 2025 this year. But if you see the segregation between the 2, right, so more -- the impact came more from those that were recontracted in the second half of 2024.

Sure. So in other words, on a recurring basis, I think the profit decline could have been slightly more than $30 million because some of them were recontracted progressively in the first half this year.

Yes. I think in the full -- if you look at the full half perspective, then it will be slightly more. But then the capacity that was recontracted in the first half of this year is smaller. So it's not that much more.

Horng, the number -- I mean, the effect is what Eugene said. But whether or not it's $30 million, maybe again, we have to look at. I'm not saying what that you're looking at just saying that we won't contract if there's no margin, right? So what used to be, let's say, $50 margin, even if it comes down a lot, let's say, at $30, we have to -- we might still want to contract at $30. But if it's at $10, we don't want to do. I think [indiscernible] my chances in the pool, right? So there are -- it won't be the entire margin disappearing as you recontract now, right? So that's why we keep on emphasizing from a couple of years ago that this is a contract portfolio, this is contract portfolio. It's a progressive -- the near-term ones will keep on getting recontracted. The medium-term ones, as they come on, we will recontract them. Then some of them will choose to sign longer because some customers, I think now prices are actually not so bad, why don't I sign longer? Some will say that now prices are weaker or shorter. So the ship, it's really a portfolio that we are playing with. So -- but generally, with the market supply and demand balance shifting, you will see weaker margins that is for sure. And then our job is to actually even find ways to offset that and to find the growth where we have to, some through acquisitions, some through integration, some through other forms of synergies and so on. So the other thing that I think one of the questions that was online that we never did answer is, so Gas and Related Services, what is your near-term catalyst, right, other than being resilient. As I mentioned just now, there is the synergies that we can derive from Senoko. That's one. The other one that can come, maybe people forget that in 2026, we will have our CCP IV 600-megawatt hydrogen-ready power plant that will come online. So that will first increase the capacity, not that we will be then total generation will increase by that amount because we then will supplement with some running less of the less efficient plant with the efficient plant, but fuel costs will come down because it's much more efficient. So all those things will add up. Sorry, Horng Han, I interrupted you. You must have another follow-on.

Thanks for the clarity. The second question I have is with regards to the remaining 13% of contract that will be renewed over the next 1 to 2 years, right? I think you mentioned, Eugene, there's 3% coming up in 2026. I believe that belongs to Sembcorp and another 10% of the portfolio will be recontracted in Senoko, total 13% over the next 18 months.

The Sembcorp is 3%. I think for Senoko, I didn't really see how much of that. But what I'm saying is that starting from 2026, there will be a contract that is coming up. And then after that, then there will be renewals from the second half of 2026 onwards.

Okay. Maybe another way to put it this way, how much of Senoko's portfolio will be recontracted over the next 18 months?

I don't really have that. I don't think we can share that data outright yet because it is a JV. And then we have a JV partner. So we are not in liberty to share that data. But it's just to give you a sense that from the second half of 2026, we'll probably see recontracting.

Okay. Senoko is definitely not as contracted as Sembcorp before our acquisition, right? So they definitely are not -- they have bigger fleet of power stations. They don't have -- they are not as contracted. Their contracts are shorter. I think that I can tell you.

Thank you. We'll take some questions from the web. Firstly, in terms of the developments to note that we have put in our slides, there's a question on what is the impact of the Singapore and U.K.-based maintenance downtime for the second half of 2025?

Yes. For the Singapore downtime of the CCP III, we did -- I did mention earlier on that it's not going to be meaningful. I think for the U.K., 4- to 5-week maintenance, it's not meaningful as well. It's not going to be a meaningful impact.

Okay. And for the newly signed PPAs of more than 120 megawatts, when do they start contributing?

We expect them to start contributing in 2026.

2026. Because the data center...

Yes, we have data centers...

Okay. Some questions on Renewables also. So the question is, how do you see power demand and supply in China on the back of AI demand growth?

China, very big country, AI will definitely make an impact, right, because they are also actively pursuing AI. But frankly, I don't have the numbers that is something that is reliable that I can quote today. But definitely, it will help. But I think more importantly, for China from the perspective of our portfolio, as I mentioned just now, the important thing is being in the right places where the supply and demand balance is more favorable and also where the price -- your plant is in the -- our plant is in the right place in the merit order so that then whoever else is setting price is of higher cost, then under a price reform scenario, you still -- you'll be better off. So that's really the -- and if you -- on a regular day, if you come into this room, the screen behind me will show the China map with our portfolio in it, and you will be able to appreciate how widespread it is. And because of that, I can't give a single -- there's no single answer to the question, whether or not we're in a good place or in a bad place. We generally -- when we do every deal, we are selective to try to be in the proper place in the good place. But sometimes when we do -- we also have some JVs, right? And the JVs, they come in the portfolio within the portfolio, some are not in very good places, then you take the good with the bad. So that's why we end up with some projects in the places. But if we are doing just single projects, we have always held on to the belief that we do it in the good places where demand supply balance as well as the merit order is good for the project. So that's the only thing I can say. So...

Any questions from the floor? Zhiwei/

Zhiwei Foo from Macquarie. This is going to be a very broad strategy question. It goes back to Renewables, right? So if you think about what's going on across the globe, there's a gradual shift in thinking about how people perceive Renewables. And hence, there's a slight pivot away. And this was kind of started out after the Spain blackout due to the fact that it was 60% Renewables running and then it costs and there was not an insufficient base load. So it's a shift from Renewables to baseload. And therefore, the question is, well it's still not 5-year strategy time. Do you -- what do you think about your strategy to continue acquiring more Renewables in other countries? And are you worried that at some point, 5 years down the road, 10 years down the road, it becomes a lot more difficult to capital recycle these assets because people just don't want so much of it anymore.

In general, the energy transition as a trend is still alive, right? So -- and that's why we came out and said, look, let's do more gas. We believe that you need to have both your baseload as well as your intermittent Renewables. Renewables will not disappear, right? Because the -- everybody has some sun and many people have some wind. So it is a means of actually achieving some independence, instead of having to import for many countries, right, unless you are in the right places favored by God, you have your own oil and gas. But otherwise, most countries would say, look, this will allow me to achieve some level of independence. And the cost is coming down so fast, right? Now coupled with that, storage cost has also come down very fast. You've seen a similar curve. So that you don't -- cost coming down, energy independence, even if you don't believe in the green, it is still good to do. So it will have its place in the energy mix increasingly so into the future. Maybe cheaper than your oil and gas batteries plus solar, you would use it, right? So that even without the green, right? So I acknowledge your point, green sometimes depending on what people really believe, right? We do believe it, but never mind, even without the green belief, it will have its place because cost has come down to a point that it is competitive, it will have a rightful place. Now if it is competitive, it has its rightful place, then there's no question about the recycling. It's really if you earn $1 revenue, this asset, you have invested $10, then it's a 10% asset, then you recycle a 10% asset on that basis. But if you are hoping to recycle 20%, then you're being unrealistic, then you are stranded, right? But then at some point, you will run our business and then somebody will buy at $10 and that fellow will become recyclable. So I'm trying to say that it must be -- again, the asset from a strategic perspective must be a competitive source because we're in the business of supplying energy. If your supply is expensive, just like the Malaysia one that we spoke so much about, then you have no place in life, you will be stranded, yes. So whether or not there will be a place. And that's why when we look at our portfolio moving forward, we think gas will remain relevant for a long time, especially in our home country. And there, in fact, is a shortage of gas equipment already, right? There's really a very significant shortage of gas equipment. So those people who already have secured their position in the gas business actually would have a good chance of making a lot of money in the next few years. So the gas part, definitely. Then in terms of Renewables, whether or not you could recycle, it is a function of at what price. So we think it's important that we execute everything at the right price and put our things in the right places, then we can recycle. So that's why a good example is India now. So our India portfolio, I want to say this season, unless, of course, the external environment becomes unconducive, it is as mature as we should be. If I sit here and tell you, no, no, no, I need to get to 5 plus 5 instead of 3.3 plus 3.3, then I mean, who is to decide 3.3 cannot IPO, but 5 only can, right? But I think we got to the point that we can. I don't want to say with certainty that, that will happen, right? A lot -- still a lot of teeth and dots to be connected. But you look at the thing by itself, it will -- it does look -- it start to look very conducive. And the team is matured. The market is hot. In terms of the Renewables market, you can -- there are new projects that are coming. There's still a little bit of what they call stranding because you have to calibrate your pace with the demand, right? If suddenly people get too exuberant, you end up with a project that is high cost, then you will be stranded. But I think we are in a very good place. India, we are in a very decent. So that's India portfolio. You never know China question is how long, right? We all live through 30 years of China boom. So how long are they going to recover and take them sell the whole. And we are in -- the assets, the early assets actually are not in a bad place. Of course, if you are relying on subsidies, then it depends on the regime's willingness to honor the promise, right? But otherwise, if you keep -- if you keep that aside, then early Renewables are planted in the best places, in the places where they have the best solar, they have the best wind. So having some of this position, actually, there is value that people haven't realized. So this is not an earnings discussion anymore. This is sort of a longer term since we brought it up, and then I take the opportunity to think about nothing analysts can factor into the numbers. But in the longer term, some of these portfolios actually the so-called residual value is probably not factored in, right? Because the same site, maybe you have a 20-year PPA, but 15 years into it, you might actually put in new equipment really because it's much cheaper, it's much more efficient. The same square foot of solar panel can now generate double -- you put it in. You're scored on the space, you are in the prime position to renew the next contract, right? So that -- those are actually good. The new ones, you have to be careful because then increasingly, you push into the marginal places, less wind, less solar and so on. Of course, wind can change all those we can get into it. But in short, I think Renewables will continue to have its place in the energy mix. Energy transition is a trend that is well in alive for many reasons. But there's no reason to believe we would totally roll back into the past where also stop the Renewables, then build coal plants. I think that is very, very far from the scenario. Hopefully, this is just my view, and I could well be off or wrong, but I think I'm willing to share that. I run this company, I have to have a view.

Thank you. We'll take a few more questions from the web. Firstly, in terms of the power spreads, what are your expectations going forward? And would Senoko be bidding for the last remaining RFP for a 600-megawatt CCGT?

Spreads, like I say, with more capacity coming online, unless demand spike up faster than people expected, then you can expect spreads to continue to be weaker, right? And at some level, it will stabilize, right? Would Senoko bid for the last remaining RFP? Senoko is the last CCGT if the demand justifies it, is in the right, has the transmission, it has the land. It is close to all the customers that is surrounding it. It has even the best sources of gas supply. It has a pipeline in Malaysia. It has Sembcorp, the largest gas supplier, shareholder. So if anybody were to build the next 600-megawatt CCGT, it will be Senoko, if I had to say it that way, right? That's my view. But I can't see who else will be brave enough to compete against Senoko in this bid. How can they win? Where are you going to find a transmission? Where are you going to find land? Who is the customer? Where is the contract? With the current wholesale market 40% down from the previous year, you want to build a power plant without customer contracts, I welcome you and then 5 years later, we'll talk about how I can build you up. So frankly, think about it, right? That's the reason why we're in Senoko. Anyway.

Question on the Urban business. Now that the reciprocal tariff is more or less finalized, what are we hearing from clients with regards to commitment to new projects in our industrial parks? President, CEO.

I think it's in relation to our industrial estate business, part. I mean, in Indonesia itself, we continue to see a growing demand because it is really a lot of the heavier industries that are moving out, including the renewable supply chain. In Vietnam, we are -- from a demand perspective, in the first half, you remain fairly robust. But I think when we are looking into the second half, we do notice strength and demand continue to still be strong for the northern parks, are [ Bac Ninh ], Hai Phong, [indiscernible] and then even in the southern regions. But in the central regions, potentially, there is maybe some questions that our customers are asking, right? But of course, the central parks are the smaller part of the -- our parks in Vietnam. So earnings are still driven by the Southern as well as the northern parks in terms of land sales. Now I think one of the points that were brought out is that now that the tariff is clear, the customers still in a more of a holding pattern or still have questions. I think the reality is that the headline 20% is agreed, but they haven't really come down to the point of being able to announce that they have signed anything definitive. I think the other second question also, it's the what defines transshipment because there is also the point where 40% is levied on transship activities. So without a clarity on what will constitute transship activities, while the headline 20% is agreed, there is still some considerations for our customers. So all in all, we continue to watch the space pretty closely.

Thank you. And the last question, there was a strategic reorganization that was announced a few months ago. Can you tell us about the progress? What are the future actions to be taken such as asset monetization? And will this translate into higher dividend payout for shareholders?

Okay. Yes, the reorg into business segments and the naming of leaders leading them definitely is well on its way now. Each of the lines of business, we call them, LOBs, the teams underneath them are coming to place, right? And then with that, the leaders of each of these business are also putting forth much more ambitious growth plans than we have announced to you in the past. So the whole idea is that how can we grow faster, how can we grow bigger in each of these lines of businesses, Gas, Renewables, East and West as well as IUS. So as you can see, Eugene is becoming very first in the IUS business, getting into really the details. Alex, you have heard from; Chiap Khiong, you have heard from; the only person is, Vipul, who is not in town. So yes, you can -- we do plan to come to you once we have established the new so-called ambition and growth plans for each of the lines of businesses that will that will guide how you can look at Sembcorp in 5 years' time, right? So that definitely, yes, you can expect that. Will more assets be monetized? As I mentioned just now, when the conditions are right, we'll be thinking about it, right? So SemGas was one of them. And then now -- but on the -- that's a case in which we are trying to streamline the portfolio. And in the cases like India Renewables is a case where we could recycle capital to fund faster growth and also then to choose the returns, right? So that's -- those things can -- will be part of the growth plan. But those are means to an end. They are not by itself. I cannot tell you that I sit here then this CEO is just selling assets. So that then I take the cash and then pay you dividends not sustainable. There's only so much you can sell, right? So I just want to clarify that. I'm glad the question asked about higher dividend payouts. I think our own track record have shown you that once we have established a certain confidence in our underlying profit and balance sheet, we do increase our payout as we did last season. So again, this round for 6 months, we have increased our payout. 50%, you shouldn't expect that to come every year. But if we are able to grow our portfolio, underlying earnings and cash balance sheet healthy, we will obviously be wanting to reward shareholders support by paying out the dividend. So I want to say coming back again that we are actually quite very confident and very comfortable with what we pay out last year, right? And then for -- without making this guidance for the full year, we don't see -- today, I don't see anything that will derail us from that trajectory, right? And the $0.23 that we paid last year is definitely a very comfortable level that we'd be thinking about, right? So that's -- I'm glad they asked about because I was quite surprised that it was hard to take it for granted. No one single question here about the dividend. It's not every day that you increase the dividend by 50%, right? So -- but it's useful to note because I think for us, it is, on the one hand, the way to share with shareholders the success. But on the other hand, it reflects on our confidence because this team, those of you who have been following us will know that we've been actually quite prudent or some might say we are conservative when it comes to declaring dividends and so on and putting out commitments of growth plans and so on. And we generally want to add on the side of communicating less and then outperforming rather than the other way around, right? So again, the dividend, very comfortable. And I want to remind you, can you give me back my Slide 17, which is Eugene's slide. It goes back to the earlier point that, look, in each of the business segments, we can see near-term value add that's well within our graphs, right? And again, we see this as a very defensive stock, very safe in the current very volatile environment. Sembcorp should be a very safe investment with some upsides that you can see near term. And then there will also be bigger upsides given our very strong balance sheet and a very strong Sing dollar, right? So that's -- hopefully, I leave you with that message. If I haven't been very good in answering questions, forgive me, but at least take away that message of what I'm trying to tell you, whether or not you believe it, look at our actions moving forward, all right? Thanks.

Thank you. There are no further questions, and we have now come to the end of today's briefing. Thank you very much for joining us today. Have a good afternoon.

You are giving lunch. So please stay and have lunch, some of our folks will be there to -- and then we will follow up with you on further questions, particularly the more ones, the Eugene and team ready to answer.