Ladies and gentlemen, good morning and welcome to Sembcorp Industries' First Half 2025 Results Presentation. A warm welcome too 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. Thank you. The members of the panel for today's presentation are Group CEO Mr. Wong Kim Yin and Group CFO Mr. Eugene Cheng. There will be a question -and -answer session after the presentation. For viewers of the webcast, please key in your question in the Q&A box by clicking on the raise hand icon on the webcast page. 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. The 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, you know, has also strengthened vis or other currencies across the board.
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 the 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 the disposal of SembEnviro. However, this was partially offset by a non-cash 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 Power Plant in Vietnam in March 2024, and an extension of a major inspection for Mingjian 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 MW 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 five 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 GW to 13.8 GW. Some of the new operational capacity includes the landmark 500 MW solar MANA 2 project in Oman, and the first large-scale 400 MW solar project in Rajasthan, India.
Our gross renewables capacity is now at 18.9 GW, of which 5.1 GW are secured or under construction. We continue to gain good traction in India, securing our second hybrid solar and VSS project and our first round-the-clock power project. We also signed a 25-year TPA with a subsidiary of Meta Platforms for 150 MW 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 is 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 two years ago.
If you look at the chart, we started with 0.7 GW of capacity, right, and then rising by 3.7 GW GW, rising by 3 GW. In 2024, across four transactions, we added 1.1 GW. This year, there were only three transactions adding only 0.8 GW. Total is about 9.4 GW. Renewable China contributes about 10% to our entire earnings base, right? 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. I just want to put into perspective what this means, right? What we are acknowledging is that there are headwinds in terms of curtailment, and some of that can be near-term because transmission capacity might come in to ease the curtailment. Some of it might be longer term, depending on where they are located. There are also pricing reforms. Because of that, we have been very, very careful.
This chart shows you that as early as two years ago, we have already started exercising a very strong discipline and being very selective. Now, our new investments are in net-import regions. In other words, those in 2025 are all in net-import regions. We also require a higher return spread above our hurdle rate. Across the years, actually, something that we do not disclose publicly, but you will know across 2022, 2023, 2024, 2025, in each one of these years, the spread above hurdle rate for the deals that are done has always been increasing. Right now, the deals in 2025, we are asking for actually very healthy returns that create a very significant buffer above our hurdle, all right?
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 GW in 2020 to 6.6 GW currently at a compounded annual growth rate of 28%. The new projects secured are across technologies. We have also been awarded hybrid and round-the-clock projects comprising wind, solar, battery, and energy storage systems. We now have 3.3 GW of gross installed capacity, with an additional 3.3 GW 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 two new Vietnam-Singapore Industrial Parks projects, bringing the total to 20 parks. The new VSIPs, VSIP Nam Dinh and VSIP Nghe An 3, 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 sq m 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 sq m 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, Batam, 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. Batam 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. 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 customer's operations. Now, moving on to decarbonization solutions, we are in exclusive discussions for the import of low-carbon power from Sarawak to Singapore.
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. Connect 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.
Okay. Thank you, Kim Yin. I hope you all don't mind my somewhat raspy voice. Because of that, I will try to hit the salient points in relation to the financial portion of the presentation. I think if we 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. The decline in the turnover is largely attributed to our gas and related services, where we saw lower, in general, prices. We also had the absence of a contribution from our SembEnviro business, which was completed. The sale was completed in March of this year. This was partially offset, obviously, by higher gas sales in terms of volumes, as well as 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. In terms of our increases in our associates and JVs, it's largely a result of a contribution of our Senoko Energy acquisition, of which 30% contributed for the full six months, and an additional 20% contributed for two weeks in the month of June.
In addition to that, the underlying business performance contributed by Urban was also stable. All this brings about an adjusted EBITDA, which is flat compared to last year. When we look at our net profit before exceptional items and our DPN FX, we did 491, which is slightly higher than last year, or largely flat. In terms of our DPN FX, which is, you know, as we all know, it is simply the mark-to-market of whatever the balance sheet balance in local currency is relative to the prevailing India rupee to Singapore dollar exchange rate on that time. Comparing that exchange rate with what was used to mark that same balance at the end of 31 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. As Kim Yin has talked about the high-level points earlier on, where EPS before exceptional items and the DPN FX was about $0.376 and ROE of 17.8% or around 18%. Now, this slide is largely talking about the group turnover. Most of the points have been covered in the previous slide. 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, declining by about $9 million year-on-year. We did see a significant positive contribution from Senoko, but it is offset by several factors.
Firstly, in 2024 earnings, 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, Fumitree also contributed a little bit in the first half of 2024, and Fumitree's contribution is obviously not having the concession returned last year. In addition to that, we also saw a couple of other factors. Number one, we did see some renewables of the shorter-term zero to five years contract, approximately about 100 MW of that or close to 10% of the hour generation capacity at lower spreads. 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.
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 were signed in December of 2024. This is not expected to persist for long term. As announced in December of 2024, it's a two-year contract. The combination of these factors was offsetting a strong combination from Senoko. The renewables segment delivered a 27% growth in the net profit. 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. Also, we saw fees commissioning of our Rajasthan solar project in India.
Now, we also saw higher wind in India, which contributed positively to the renewables net profit. Conversely, we did see some of that growth offset by higher curtailment in China, as Kim Yin has highlighted. 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 the India segment saw a slightly positive improvement as well, about $2 million, as a result of a cost optimization. Some of you may be asking how much did the sand waste contribute to the integrated urban solutions. In the first half of 2024, sand waste contributed $9 million, and in the first half of 2024, sand waste contributed $11 million.
If you remove the effects of the sand waste, you would see that the IUS segment has performed steadily. 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 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 costs, we saw a reduction of close to 10%.
That is because we saw lowest interest rates and we were able to refinance some of our debt, corporate-level debt in the first half of this year. 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. 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 SEIL, 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 redeemers from cash flows. To date, in total, since we have completed the transaction, we have collected $928 million in cash flows via the DPN. 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, 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-cut the Singapore dollar versus our key overseas earnings currencies exposure, quite evidently, the Singapore dollar appreciated against all our key currencies. In fact, against most major currencies.
When we look at the currency effect, where we saw our overseas currencies, local currencies depreciate anywhere between 2% - 6% against the Singapore dollar, that has brought about a $33 million earnings translation impact. This impact, I'm calling it out because it's not something that you see in the P&L in itself. The P&L captures transaction realized and unrealized gains or losses, which remains stable because we hedge those. This is really a translation effect of which it cannot be hedged. It is important for us to call it out because in the absence of this FX effect, without the impact of the $33 million, which comes about from the translation, our earnings half on half would have seen a 5% - 6% increase instead. This is something to take note and something to note for the second half of the year. Now, you move to the next slide.
This is really to emphasize the defensiveness of our earnings as well as the current cash flows of our business portfolio. It's instructive to note that 88% of our group net profit as well as the cash flows comes from investment-grade markets. This contributes to very defensive earnings to Sembcorp Industries with Singapore contributing to half of the group net profit. 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, you know, most of the elements were already discussed earlier. If we move to the next slide, in terms of our first half capital deployment outcome, in the first half, in total, between capital expenditures 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 CCP4, which is our H-class, which will come online sometime in 2026. If you 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.
Taking into account our divestments, 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 our growth perspective, our free cash flow, which is available for both debt repayment, funding new growth, and dividends, stands at $1.3 billion compared to $927 million last year. 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. Adjusting for that, our free cash flow for the first half of 2025 is still commensurate with the first half of 2024 at $930 million, showing the resiliency of our cash flow generation. 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 just under $7.4 billion. In a commensurate fashion, you see our leverage ratios improve as well. More of interest will be our net debt to adjusted EBITDA coming down from 3.8 x- 3.6 x. One point to note is that our total equity did reduce slightly. This is a result of a foreign currency translation reserve because, as I mentioned earlier on, the Singapore dollar strengthened against all our overseas currencies. That resulted in a $330 million impact against equity translation. In spite of that, even when you look at the net debt to equity perspective, the ratio improved from 1.36 x as of December 31, 2024 to 1.34 x as of June this year. When we look at our group debt profile, as mentioned earlier on, we continue to focus at pushing out our maturities.
If you look at our debt maturity profile right now, the bulk of our debt has been pushed on in maturity after five years. In terms 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% 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 is helped by the strong outcome of our two-year and a half-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.
While you see many numbers on the slide, it is important to note that the combination of our cash and cash equivalents as of June 30, 2025 and our unutilized committed facilities stand at $3.5 billion. We still have $3.5 billion of on-demand liquidity that we could readily draw on to deploy for growth. I would complete this by talking about our outlook. Our outlook, essentially, we're saying that we show a strong and resilient performance in the first half of 2025 in spite of the macro uncertainties. Our contribution from the gas and related services segment was steady, despite having seen lower wholesale prices in the Singapore market and also not having the contribution from Phu My 3 in Vietnam. A lot of this resiliency was also supported by the contribution from Senoko Energy. Our renewables segment saw stronger performance in India and also the commissioning of projects.
This is offset by lower earnings in China. 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. This is, of course, offset by lower SembEnviro contribution given our divestment in March of 2025. Now, looking towards 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. In the U.K., we could face a possibility of some customer demand reduction as a result of the closure of the Sabic Ethylene cracker facility in Wilton.
The earnings for the renewables segment is expected typically, right, seasonally to be lower in the second half of the year. There is also a possibility of a continued higher curtailment and lower tariffs in China compared to 2024. This is expected to be offset by new project contributions. For the integrated urban solutions segment, we expect to be stable in the second half of 2025, excluding the contributions from the divested SembEnviro in the first half of 2025. We do remain watchful of any potential impact on our land sales in Vietnam, particularly arising from the economic implications of the trade tariffs. We continue to monitor the macroeconomic developments, including shifts in any of the investment sentiments, particularly in relation to the strengthening of the Singapore dollar against our major currencies, which will ultimately impact our reported business performance. 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. 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? The group remains committed to capturing the market's opportunities and to build a resilience in our business and also creating long-term value in our sustainable energy transition strategy. That ends my presentation, and we are open for Q&A. Sorry if you didn't find my voice particularly soothing.
Before we go to Q&A, I just want to, Eugene has taken you through the recent developments. You'll see that the balance sheet actually has deleveraged. It's actually, and we have the cash flow profile, you know, has been very strong, all right?
That has given us the confidence to say, you know, the underlying portfolio is very defensive and very resilient. That's why the Board said, you know, 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, you know, that level could well be maintained. Yeah. That's the first point. Again, underpinned by the strong portfolio and the balance sheet. The other part of it is I want to draw your attention back onto part of my presentation where we talk about each of the business segments, right? They all come with some near-term upsides that are within our reach. 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 are in motion. That's within our reach. In the case of renewables, we're talking about capital recycling, right? Five years ago, when I came to this company, you asked me about capital recycling. I said, "Look, I got nothing to recycle." Today, it's mature. 3.3 GW of operating assets, 3.3 GW of secured or under construction growth. Such a portfolio, if you compare to the other listed portfolios in India, you know, you will be able to see the quality of it, right? We are not even including in that narrative the whatever pipeline that other companies tend to sell. You know, if we throw that in, there will be 10 gigs easily, right?
It is, and the market condition seems to be conducive, right? Market conditions change every day, right? Until two days ago, we thought India was 25% tariff and then suddenly became 50%. How is it going to impact the market sentiment? It's something that we have to watch. On our part, the portfolio is ready. The portfolio is mature. The portfolio is attractive, right? That's within our reach. That's renewables. When it comes to integrated urban solutions, we show you Batam, some near-term capitalists. Literally within our reach. This is just 50 km away, you know, and the fiber cables are being built by people like Singtel, right? Those are not going away. The moment the fibers are built, you will see the data centers and you will see the demand, right? We have a project. We have a partner.
We have land that is, you know, approved and ready to sell. They are near-term capitalists, strong dividends, strong balance sheet. It's a safe bet with some upsides. In the current environment, I would like to think that we're actually very attractive. The other thing about the Singapore dollar, Eugene is CFO, right? He always wants to first tell you the bad news. Yes, when it translates back into Singapore dollars, our earnings, overseas earnings become smaller in Singapore dollar terms. This is also then the season with a strong Singapore dollar to go out there to do shopping, right? With strong balance sheet, strong cash flow, strong Singapore dollar, this is 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.
I just want to put things into perspective. You know, despite the formality of having to read through all the results and all that to you, I think putting that into perspective, it's a safe bet with dividend confidence, and it comes to near-term upsides that you gain while within reach, and also longer-term upsides when it comes to potential acquisition opportunities, all right? Those are the things I want to leave you before we launch into Q&A. Eugene, please.
Thank you, Kim Yin and Eugene. We've now come to our Q&A session. Please raise your hand if you have a question, and the microphone will be brought over to you. Please state your name as well as organization. Gentle reminder for those viewers who are on the webcast, you can also key in your questions in the Q&A box by clicking on the raise hand icon on the webcast. We'll take questions from the floor first. Zhi-Wei has the mic already.
Thanks. Zhi-Wei for Macquarie , I have three questions. If you could just go back into slide 16 where you have the net profit for the various segments shown. Thank you. 15. If you look at first half of 2024, that had the downside of a maintenance shutdown, which had a $50 million contribution, right? If you were to add that back and net out the one-off gas sales that you said will happen in first half of 2024, you're looking at about a $365 million baseline number. In first half of 2025, you had the benefit of Senoko. It's maybe, you say, $30 million. You're looking at a delta of $300 million in first half of 2025 versus $365 million in first half of 2024. How much of that difference can be explained away by the recontracting of the lower spot spreads, the higher import costs, and then your resilient gas earnings?
Okay. I will put it this way, right? When we take away the effects that you talk about, which is essentially a 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 2024 coming to the first half of 2025, our Singapore, the effects of the combination of the expensive electricity that we brought in from Malaysia, as well as the recontracting of that, you know, roughly 10% of the portfolio, saw a like-for-like decline of about 10%. Just over 10%. I think it's important to recognize the resiliency of, you know, on a like-for-like basis in light of the environment, in fact, of the macro environment.
If you look at the other market players in the same period, you would be able to see what the impacts are. Also, when the recontracting of that 10% of the portfolio that took place, these are contracts that were signed in 2022, 2023, right? Although year-on-year basis, comparing first half of this year with first half of last year, you said dropped close to 40%, right? When you compare that to an average of contracts that were signed in 2023, 2024, you said actually dropped close to 60%. Whereas on the like-for-like perspective, our Singapore portfolio dropped just over 10%. I think that shows the resilience of our contracting strategy. Instead of going to the details of those, I just want to characterize it that way for you.
Sure. If I may also, the way I think about it, I mean, it's much more quants. About two-thirds, one-third. About only one-third is the effect of the recontracting. The one-time things, non-recurring things, are about two-thirds, the effect, if I do think about it that way, right? Yeah. Senoko acquisition is, of course, you know, you buy an asset that has recurring earnings. Some of the one-time things, today, if you ask me, I wish we never did the import deal in Malaysia. It weighs us down for a couple of years, but I think there are also certain good things coming out of it because it allows us then to be, we are the only ones, right?
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. Now we have a very, very clear idea what can be sold and what cannot be sold. That, I think, works well for us in the future. It's a little bit of tuition fee, but it's okay. The good thing is it doesn't recur.
Thank you. I appreciate it. One follow-up on the first question. I believe the delta at this price is about 20%. If I understood, you've described about 10% of the delta. What's the remaining 10% due to?
20%.
hundred sixty-five to three hundred is about 20%. 18% if you want to be precise.
I think you're looking at the whole of the gas and related services segment. What I was describing was more Singapore like-for-like. The other elements were obviously Fumitree as well. Fumitree contributed in the sale in the first half of 2024, and it doesn't contribute anymore now.
Minjian as well, right?
Minjian saw a slightly longer MI that impacted a little bit of our first half earnings this year.
Okay. Understood. Thank you. Second question, and then I'll just go into the third question as well. You mentioned that the Singapore plants will have a maintenance of about five weeks in the second half of 2025. 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 to the third question first?
No, we can talk about this one first.
Sure.
I think the difference is that for this particular one, we were able to obtain the necessary CFDs as well as the tolls, also, you know, supported by Senoko. Some of the backup units are Senoko. As a result, you know, we don't have the same limit, same impact as the MI last year, but we have to purchase the CFDs at a slightly higher cost.
Got it. Thank you. Last question is on Vietnam's 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 are lower by 30% - 40%. If the worst case happens, how do we think about debt 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 they have already heard the voices, and they will come up with a solution that is much more calibrated, much more. The likelihood of the worst happening is not very big. The second thing is that if it does happen, Vietnam represents a very small part of the portfolio, right? In fact, I drew your attention earlier to the China curtailment and where the industry is because that's 10% of our earnings base. 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. 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, you're Southern Global East, you know, so all of China, Southeast Asia.
I agree with Kim Yin. Based on the discussions that we had with various government agencies in Vietnam, as well as the intelligence that we get through the grapevine, 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. I think some good traction.
Thank you.
Thank you. Next, Rahul. Sorry.
Thank you. Rahul Bhatia from HSBC. Two questions. First, going back to the Singapore power market, can you help us with some insights on how you're thinking about the Singapore gas market or your assets leading up to the new 600-MW plant? Today, you have a bit more than 700 MW of contracted capacity. Assuming spreads remain where they are today, are you thinking of adding more PPAs or thinking about retiring some old plants? Interestingly, from disclosed data versus 2024, it appears that your contracted capacity in Singapore has actually reduced by 20 MW. Is it more because the current available spreads mean that you're not adding more PPAs or recontracting the existing ones, or is it 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? Our, you know, I've always said that our net generation capacity is about 900 MW, right? With the addition of the recently announced PPAs that Kim Yin has talked about earlier on, about 120 MW. In general, our base generation capacity with the contracts has gone up to about 960 MW. It actually has improved. It has increased slightly. 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 Energy to manage the portfolio moving forward. There is a significant difference.
We're talking about a 2,000-MW portfolio, double the size of what we had, and now with the opportunity to work with them. That's why, back to Zhi-Wei's question just now, was it Zhi-Wei's question, that we are able to, the MI impact as opposed to earlier when you don't have generating capacity, you're just forced to go to the market and the other guys are all watching you. You're just, you know, going to get not a very good deal. Now we have leverage, right? How do we do that in the whole thing? 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's higher. Maybe we reconcile it offline. Yeah.
Okay. Thanks, Kim Yin and Rahul. Hi. I think with Senoko Energy coming in, especially 50% in June, it gives us a really different perspective of running the assets. When we were 30%, we were still two companies. With 50% itself, we got approval to actually look at it as a whole. Maybe starting off with contracting first. From contracting in the past, you have Senoko Energy, 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. We are actually doing more contracting or trying to get more contracts on a long-term basis. We do not need to just worry about what Sembcorp has as a power plant, but as a whole, Sembcorp and Senoko Energy have as a whole assets.
Kim Yin is right. In the past, when we were alone, we were very, very worried to contract too high because if we trip, the market will watch this exposure and really sometimes the wholesale price will go crazy. With a bigger portfolio itself, we will definitely choose more contracts because then we can actually spread out against more assets that we have. 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. 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 plan quite quickly.
With the combination itself, we can then look at all the contracts, the heat rate, and all our machines that are available from Sembcorp and Senoko Energy and actually optimize the heat 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. Increasing the spread subsequently. I think with Senoko Energy, 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 an operation optimization point of view, and that gives the synergies that we are all talking about. I hope I answered your question.
Yeah. Hi. Contracting. Today, in the past, when we sign a contract, if the plant is down, I'm still going back to Zhi-Wei's question on the outage. When the plant is down, then you are unable to fulfill your contractual obligations. You have to go to the market to buy, right? Because the other Jenkos also know, I mean, it's a very small market that you are buying because you have to cover your contract position. They have negotiating leverage. Today, with Senoko next to us, if we contract aggressively, and even with an outage, unplanned, you know, we can always call upon Senoko's plant. That caps our exposure. My bargaining power in the market, in a small market, has just, you know, no 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. From Senoko's perspective, I'm not taking advantage of my partner, right? It is a win-win for both. They get to run a unit they otherwise won't be running and make some revenue. Our contract position is covered without having to go to the market to buy. Simple things like that, there's win-win for everybody. 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, you know, high prices for consumers. Everybody's happy about it. All these are things that are 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, coming back to what Chiap Khiong was talking about, it allows us to go out there to contract much more aggressively, right? This is now to Rahul's point. 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 the, you know, and have destructive competition with other guys trying to contract. We are the largest guy now. We are the Saudi Arabia in our oligopoly. We need to hold up the margins. 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, you know, I'll be constrained by my in-stock capacity of 1,000 MW. Now I've got a bigger fleet of plants. I can aggressively go out there and chase after my customers.
If they come along and say, "I want five-year at this rate, you know, starting from 2026, are you able to fulfill?" No problem. Please come and talk, right? Earlier, we were saying, you know, let's go and talk to the operating guy. Is your plan able to do you have a plan outstaged in 2027?" That's our thing. Now, just go out there, sign up. We will be able to cover it one way or another. We have 3,000 MW at our disposal.
Maybe we just add a few more points there. Now we have a whole fleet of baseload order machines and batteries as well. It's actually a very unique position. 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. You've got a whole activity from gas to power plant, a whole fleet of assets that we have from newer plants to older plants and battery. The other unique thing for us is also we are into the solar space and the renewable and also decarbonization space. That's where it helps us to build confidence for energy transition with partners or customers. That can also help Senoko build the pipeline of contracts. I think we are in quite a good unique position.
If you're trying to import power from a neighboring country, right, and we want to import green power, chance 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 beg someone else to provide insurance or emergency cover for us. The Senoko portfolio gives us all that. If there's an opportunity to import power from overseas, we need green power or otherwise, we are in a very no one else even comes close to their ability to and their confidence to say that I can just do this without helping to this problem, that problem, you know, the intermittency, you know, emergency backup. We got it all in the portfolio, just in Singapore.
Rahul, just to clarify your question, your question is why did the more than 10 years decline the percentage? Was that your question?
In the operational data release, we have data of 730 MW for 1H 2025. In 2024, it was around 730 MW for Singapore Kojin.
In terms of the.
Contracted capacity. It just says contracted capacity.
Okay, maybe we take this offline because maybe.
Rahul, sometimes we also don't run the machine and buy back if it's cheaper. The flexibility is to produce, the flexibility is to buy back, and if we buy back, we've got excess gas. We also can sell the gas. The optionality, don't just look at the generation contracting level, and sometimes we do some of this.
Let's reconcile the numbers offline, right? We're not reading from the same page.
We're not reading from the same page.
Second question is about the strategy, right? 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.
I assume India would be up, right?
India is up because we have a higher win for India. Net net, India is slightly up, right? Southeast Asia is about the same. China is down because, you know, first half of curtailment in China is higher than the first half in 2024.
Thank you.
Good morning. It's Hei Hua from DBS. Just two questions. One is the follow-up on the gas segment. In the slide, it shows that for the zero to five-year contract, there's still about 13%. Possible to share with us what is the renewable, the split, right, next this year, next year for this shorter-term contract?
Yeah. 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 have all been renewed. In general, in the second half of 2025, we don't see a lot of renewables, and we'll probably see a little bit of a renewal in 2026, probably about 3% or so, right? Of course, in the Senoko portfolio, we are contracted all the way into 2026. We will also see renewables in the Senoko portfolio, part of it coming through in the second half of 2026.
Okay. For Kim Yin, it's 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 renewables. Based on our current assessment, how should we think about maybe the risk of the asset impairment given maybe there's a change in the cash flow projection forward?
I think, as I mentioned just now for Vietnam, based on the latest that we heard, the government is aware of the impact if they do something so drastic on all the investors, right? For investor sentiments, they do rely on foreign investments for growth. We are cautiously optimistic that they would be very calibrated. Yeah, 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. It is a bit hard to tell, right? The only thing you would, you know, you rely on at the end of the day is the demand-supply balance in the region in which you have your plant, who is the marginal plant that is setting price, and so on, right?
Of course, it's constantly being updated by the building out of the national power grid. 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 plant might be different. I guess I say a whole lot of all that, but at the end of the day, I'm saying nothing, frankly, because I don't know. 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. We are hoping that we think the impact would be less than what other people would face. Yeah. We do have one or two projects in the northwest.
Those are, you will be seeing that it's quite a stark difference between those and the coastal. 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. I can't give you, I really cannot answer that question because I can't tell. China is too big, right? Every time I say
I'll look into this transmission line versus this transmission line. Somebody else will come up with another dimension that comes from the site. I don't want to say blindsiding, but it's big enough and dynamic enough in terms of decision making that it is very difficult to predict. We are watching. What we can tell you is that we're to reassure you that we are watching that very closely. That's why, end of last year, we actually made an ECL provision for our China receivables. To the extent it is prudent and necessary, we will be making the relevant adjustments and keep you informed. We are taking actually quite a conservative stance when we look at these things. It's actually quite a conservative stance.
Not answering your question, but I can only tell you that we take a conservative stance and then we will let you know as soon as there are any important developments. So far, it is more the curtailment that, you know, some argue is temporary, some argue it might last longer. They are debating about how long the demand-supply balance will catch up. It's a matter of how long; it is not a matter of permanent. That's on the curtailment. Pricing reform, those can be permanent. Like I said, I can't tell. It's different locations. They do it differently. Sometimes even when there's an announced policy, the provincial government would impose their own additional rules. Chinese say [Foreign language] on the thing. Some are good, some are not. Most of the time, not so good. We will have to look at it case by case. Sorry, I couldn't answer your question. Frankly, I also don't know.
Maybe just to.
Sorry.
Maybe just to clarify one point to add to what you mean. In Vietnam specifically, the tariff issues is really in the JV, the roughly 100 MW of BCG Gaya portfolio. The Gelex portfolio that we acquired did not face any form of the CCA issues. That one, the fit tariff is fine. Just to be clear, that is not the entire Vietnam that is facing a tariff issue.
Sorry, if I may, it's because she has been frantically, you couldn't see her. Her apologies.
Hi, thanks. I've got just five questions. Thanks for telling us what's the catalyst in the near term. I'm just looking at your wording that you use for gas. You said that it's resilient. We can expect that whatever that we have seen in the first half this year for gas, particularly for gas, it's not a normal run rate because you will still have to actually consolidate or rather higher percentage contribution from Sembcorp, firstly, and also the synergies and financing that you are working on. 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, the 20% coming in for the full half of contribution and the synergies starting to come in as well. You're right. When we say resilient, the first half doesn't reflect the second half run rate. Yes.
Okay. Thanks. Because you call out the S$ translation to $23 million, and you say that if you had not had that, your group profit would have gone up by 5 %- 6%. That is separate from your DPN forex, right?
Absolutely separate.
Where would this $23 million translate into in FRE, right?
The reason why I call it out is because it doesn't, from an accounting perspective, it doesn't come up. 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? You're just taking your first half, call it rupee net profit, multiplied by the average rate of your first half. That will be your translated and consolidated into your Singapore dollar books, right? If the average rate is 6% lower than last year, it simply means that impact will be in there. Unfortunately, it doesn't capture it. It's not captured in the statements. 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. You see the $330 million there.
That's still on my second question. On DPN, if we assume that the Sing dollar rate is as is right now, how would that 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 the full year loss on the DPN FX would be 95. In the second half, there would be no further impact. If in the second half, the India rupee appreciates against Sing dollar, then in the second half, there will be a positive, okay, a DPN FX. For the full year, you have to add the two. If it depreciates some more, there will be a further negative in the DPN FX.
Got it. Thanks. Just on renewable import from Malaysia, Kim Yin, you said that that's one-off, but the contract is two years. Isn't it recurring? How do you actually sell if you have imported at high cost? Who would take up?
Oh, friend not here. No, yes. One-off for two years. Okay. That's a short answer. In other words, it's not something that you can expect to keep on coming and weigh us down forever. How do we sell? You negotiate hard more. At some point, you know if people don't want to take, you might have to offload and take some of the losses. Right. That's the honest truth. That's the duration fee that we pay. Now we know exactly what is the threshold of pain for ourselves as well as for our customers for green. Of course, green sentiments, you know, season to season, the threshold is a bit different. It's something that I think if you ask me, I wish you never do. Having done it, it's something that now we learn something from it.
Thanks. That means in the longer term, you know, we used to talk about the huge renewables import. We might stall on that?
No, it wouldn't because there are a lot of complications because this one is coming from Malaysia. Some of the customers are saying, "Oh, you know, Malaysia RECs compared to Singapore RECs, Singapore are better." For us to build up the Singapore, the crunchy that I mentioned just now, those are still highly sought after. Those continue to support also our brown, our gas business.
I'm talking about the future of big imports from Malaysia.
That's why you have to be careful. The next guy that comes and sells you Malaysia import, you better make sure that your customer is lying enough to buy it.
Got it.
Whether it's Indonesia, whether it's Vietnam, it's something that has to be the greenness of it. There are many shades. Let's put it that way. There are many shades of green.
Thanks. Just my last two questions, just on recycling of RE assets. Are we looking at in the second half this year? 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 renewables portfolio. Was it just specifically for India that you're looking for monetizing?
It is mature to consider.
I want to.
For India.
Is that second half that you're looking at?
I think that's tricky. We are evaluating it, so we will let the market run at the right time, obviously.
Got it. Thanks. Finally, on your shopping spree, what's the size that you're looking at and where?
You will have to be in the regions that are within our existing span. It won't be in Africa. I can tell you where it won't be. You give me zero eye on me. It won't be in the Americas, right? It won't be in Africa. Chances are, they won't be in Central Asia. I can only tell you that this is a bit sensitive. I'm sorry, but the Singapore dollar is strong. There are good opportunities that are out there because while our balance sheet, we delivered somewhat and we continue to enjoy from the cash flow, many players out there are actually suffering. Even without interest rates going up, they are suffering. For whatever reason, you can go in, you can go in big, but there are weaknesses. When the tide recedes, then the people who are left standing, wearing their trousers, you benefit.
I'm sorry, I can't tell you because I think that that's, you talk to so many players, you will know we won't be something that we can disclose at this stage. There are enough sizable opportunities. You ask about size. Today, we are growing into a billion-dollar profit company. I won't be touting this if it is 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. From $1 billion become $1.01 billion, I won't be able to face you when it actually happens. Let's put it that way. You will have to be in the $100 million range type things. Those are the type of things that we hope we can get.
Thanks. That's very helpful.
Right, right. Sorry.
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 still single-digit. Do you think that reverses? If you look at it in terms of capital allocation now, I think U.K. is still struggling. In terms of, I think this is a question for Eugene, in terms of receivables on China, how much is left? The final question on Singapore was more in terms of those 5 - 10 year contracts. Have you started to see incoming from your customers saying to, "Let's press it on the table and renegotiate considering spark spreads have come down"?
Thank you. Receivables first, right?
Yeah, yeah.
Yeah, just to answer because that's an easy one, $270 million Sing. For China, we are subsidy receivables as you expose.
Eugene, has it come down from second half versus first half, or it's gone up?
No, it's not. It's not come down. It's gone up slightly, yeah.
Okay. Thank you.
In terms of the portfolio, because you can see, as I mentioned just now, China, we have been very disciplined. Relative to other geographies, you see us doing a lot of India. We are increasingly doing more in the Middle East, right? Southeast Asia continues to be at the same similar pace. The portfolio shape will definitely shift given where we are adding things, right? If indeed we were to do a capital recycling in India, then you will see a one-time 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 directionally, the Asia-Pacific area is still where we hunt. Again, like I told Zhi-Wei just now, you won't see us venturing into Africa not anytime soon or the Americas.
We don't have more focus on the Middle East.
Yeah, Middle East.
You said there's so much going on there. I thought that is there something that you are really thinking about going forward?
Yeah, we are hunting actively. We have a team. Vipul 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, many of those projects are greenfield in nature. They are big. They are greenfield. Contribution will come only, you know, after the construction. The portfolio shape shifting into Middle East, unless we make sizable acquisitions, you won't see that in the next year or two. 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, much more visible because those are bids, you know, and we've got good partners. We've got good EPC contractors that work with us.
Some of those will come through, just like Mana in Oman, you know, and we have a very good position in both U.A.E. and Oman, right? Saudi Arabia, big projects are coming. 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, you know, 20 because some are renewables, right? Renewables, if you do now, if you win it now, you might see contribution in 2028, 2027. If it's gas-fired power, it might take a little bit longer. Those are the big projects that are there. The wind is shifting west in terms of new investments this season. Wind is shifting west. I hope that gives some color to your question.
I think it's just the last question on Singapore.
Singapore, can you remind me?
Oh, it's okay.
Spark spreads, renegotiation for a short-term contract. Yes, as the capacity additions come into the Singapore market, this is something that we have always expected. The short-term contract spark spreads will be weaker.
I was thinking of the 5- 10 year contracts.
5- 10 year contracts.
Coming to the table and renegotiating them with you, again saying that it's time to relook considering what we signed earlier versus what we want to kind of look at.
No. I think the moment they have entered into contracts, at least in this environment, people honor their contracts. The quality of our customers are all, you know, good people like DBS and Morgan Stanley. We don't have, I mean, you know, in some places, in some parts of the world, you know, people will come to you and say, "Hey, sorry, our times are bad. You know, the contracts are bucky," but not in Singapore.
Do you hear that?
For the same reason, if we sign a bad contract, we have to honor it. That's why I was, you know, Zhi-Wei was asking about the Malaysian import. For two, we dipped our toes into the water, and then it was hotter than we thought. Luckily, we didn't expose ourselves too much to it.
Thank you.
Please.
In front, in front.
Sorry, Rachel.
Yeah.
Thank you, though. Thank you for letting me ask a question. My name is Rachel, and I am from UBS. My question relates to India renewables. There was a Reuters article out on August 1 that's saying that there's some 50 GW 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? On the longer term, given that what we've seen in, for example, Vietnam, how do you intend to mitigate against these kinds of things that you're seeing?
Okay. First, stranding is if you have invested significantly, then you are stranded. Right. The way we develop projects in India, we will not make significant commitments until the PPA is signed. That's number one. There's no such concept of stranding. Second thing is that actually, about half the capacity that we have been awarded, you bid, you win, they give you a letter of award. They will take a little bit of time to go and sign the PPAs with the downstream. They will come back, meaning the SECI, then they will come back and sign the PPAs with us. About half our capacity already signed PPAs. The other half of it, they were won in competitive tenders. The prices are actually quite competitive. It is a matter of them being able to sell it down. Also, some of the cases are waiting for transmission.
We actually have to, it's actually the other way around. We have the option now to say, "Hey, I don't want to 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." What that means is also what we have actually secured along the way as a portfolio are some connectivity. That means options on land that has got transmission ready. If we win the bid, sign the PPA immediately, we can buy equipment and put it onto the land without waiting for transmission. That land with connectivity is actually our strength. Some seasons ago, sitting here, we were talking about us procuring land as the strategy in India, IPP. That's exactly it.
Now this land becomes, if we won a bid, we will hold it for them for a while. Beyond that, we will actually move on and apply the connected land to some other project that is real. I want to say, first, again, no stranding. Second, they were all competitively priced, and they were won in competitive tenders. Because of that, the pricing should be quite competitive. Third, we are ready to use the land to build something else if they don't come and sign.
Thank you. Can I just confirm that when you say that you have no stranded assets, it means that the article is, to a certain extent, incorrect?
Yes. Yes. Democratically, yes. Yes, yes. There's a lot of people who want to sell papers now.
Okay. Next question, Horng Han.
Hi, Horng Han from CLSA. We 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 was being recontracted. In other words, 10% recontraction perhaps translates to a $30 million kind of a decline in earnings. The question I have here is that the recontraction, did it take place at the beginning of this year, or was it progressively throughout the six months' period?
No, the recontracting, there were two effects, right? One is we have recontracted these short-term contracts through the second half of last year as well. You obviously have the impact of those. There were some contracts that were also contracted somewhat progressively through the first half of 2025 as well. It's a combination of these two. Contracts that were recontracted in the second half of 2024, therefore you see a full half impact of those. There were some that were recontracted in 2025 this year. If you see the segregation between the two, more of the impact came from those that were recontracted in the second half of 2024. Yeah.
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 of this year.
Yes. I think if you look at a full half perspective, then it'd be slightly more. The capacity that was recontracted in the first half of this year is smaller, so it is not that much more.
Horng Han, the number, I mean, the effect is what Eugene described. Whether or not it's 30, maybe again we have to look at what that you're looking at.
I'm just saying that we won't contract if there's no margin. Right. What used to be, let's say, $50 margin, even if it comes down a lot, let's say $30, we might still want to contract at $30. If it's $10, we don't want to do. I might still take my chances in the pool. It won't be the entire margin disappearing as you recontract. That's why we keep on emphasizing from a couple of years ago that this is a contract portfolio. This is a contract portfolio. It's a progressive, you know, the near-term ones will keep on getting recontracted. The medium-term ones, as they come on, we will recontract them. Some of them will choose to sign longer because some customers might think, "Enough, prices are actually not so bad. Why don't I sign longer?" Some will say, "Hey, now prices are weaker.
I should sign shorter." The shift, it's really a portfolio that we are playing with. Generally, with the market supply and demand balance shifting, you will see weaker margins, that is for sure. 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. The other thing that I think one of the questions that was online that we never did answer, it said, "Hey, you know, so gas and related services, what is your near-term catalyst?" Other than being resilient, as I mentioned just now, there are 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 CCP4 600 MW hydrogen ready power plant that will come online.
That will first increase the capacity, not that total generation will increase by that amount because we then will supplement with some running less of the less efficient plant, or with the efficient plant, but fuel costs will come down because it's much more efficient. All those things will add up. Sorry, Horng Han, I interrupted you. You must have another follow-on.
Very good. Thanks for the clarity. The second question I have is in regards to the remaining 13% of contract that will be renewed over the next one to two 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, and you can see Senoko total 13% over the next 18 months.
Oh, the Sembcorp one is 3%. I think for Senoko, I didn't really see how much of that. What I'm saying is that as far as starting from 2026, there will be a contract that is coming up. After that, there will be renewals from the second half of 2026 onward.
Okay. Maybe, in other words, put it this way. How much of Senoko's portfolio will be recontracted over the next 18 months?
Don't really have that. I don't think we can share that data outright yet because it is a JV. We have a JV partner, so we are not in liberty to share that data. It's just to give you a sense that from the second half of 2026, we will probably see recontracting.
Okay. Thanks.
Senoko is definitely not as contracted as Sembcorp before our acquisition, right? They definitely are not. They have a bigger fleet of power stations. They don't have, they're not as contracted. Their contracts are shorter. I think that I can tell you.
Understood. Thank you so much. Thanks.
Thank you. We'll take some questions from the web. Firstly, in terms of the developments to note that we have put on 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?
For the Singapore downtime of the CCP3, I did mention earlier on that it's not going to be meaningful. I think for the U.K., four to five-week maintenance is not meaningful as well. It's not going to be a meaningful impact.
For the newly signed PPAs of more than 120 MW, when do they start contributing?
Yeah, we expect them to start contributing in 2026. Yeah, 2026. Because the data centers, yes, yeah, the data centers are synchronized.
Okay. Some questions on renewables also. 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. Frankly, you know, I don't have the numbers that is something that is reliable that I can quote today. Definitely, it will help. 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 plan is in the, our plan is in the right place in the merit order so that whoever else is setting price is set off a higher cost. Under a price reform scenario, you'll still be better. You'll be better off.
That's really the, and you know, 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. You will be able to appreciate, you know, how widespread it is. Because of that, you know, 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. Generally, when we do every deal, we are selective to try to be in the proper place, in the good place. Sometimes when we do, we also have some JVs, right? The JVs, they come in the portfolio. Within the portfolio, some are not in very good places. You take the good with the bad. That's why we end up with some projects in the places.
First, 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. That's the only thing I can say.
Any questions from the floor? Zhi-Wei.
Thank you. Zhi-Wei from Macquarie . This is going to be a very broad strategy question. How it goes back to renewables, right? If you think about what's going on across the globe, there's a gradual shift in thinking about how people perceive renewables. Hence, there's a slight pivot away. This was kind of started out after the Spain blackout due to the fact that it was 60% renewables running and then it caused, and it was not an insufficient base load. It's a shift from renewables to base load. Therefore, the question is, while it's still not five years strategy time, what do you think about your strategy to continue acquiring more renewables in other countries?
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? That's why we came out and said that, "Look, let's do more gas." We believe that you need to have both your base load as well as your intermittent renewables. Renewables will not disappear, right? Because everybody has some sun, and many people have some wind. 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. Otherwise, most countries would say, "Look, you know, this will allow me to achieve some level of independence." The cost is coming down so fast, right? Now, coupled with that, storage costs have also come down very fast. You've seen a similar curve.
Cost coming down, energy independence, even if you don't believe in the green, it is still good to do. It will have its place in the energy mix, increasingly so into the future. Maybe it's cheaper than your oil and gas. Batteries plus solar, you would use it, right? Even without the green, right? 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. If it is competitive, it has its rightful place, then there's no question about the recycling. It's really, you know, if you earn $1 revenue, this asset, you have invested $10, then it's a 10% asset. You recycle a 10% asset on that basis.
If you are hoping to recycle 20%, then you are being unrealistic. You are stranded, right? At some point, you will run out of business, and then somebody will buy it at $10, and that fellow will become recyclable. 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, which we spoke so much about, then you have no place in life. You will be stranded, yes. Whether or not there will be a place, 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. There, in fact, is a shortage of gas equipment already, right? There's really a very significant shortage of gas equipment.
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. The gas part definitely. In terms of renewables, whether or not you could recycle, it is a function of at what price. 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. That's why a good example is India now. 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, you know, 5 + 5 instead of 3.3 + 3.3," then, I mean, who is to decide? 3.3 cannot IPO, but 5 only can, right?
I think we got to the point that we can. I don't want to say with certainty that that will happen, right? Still a lot of teeth and dots to be connected. You look at the thing by itself, it does look, it starts to look very, very conducive. The team is mature. The market is hot. In terms of the renewables market, there are new projects that are coming. There's still that 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. I think we are in a very good place. India, we are in a very decent. That's India portfolio. You never know. China, the question is how long, right? We all lived through 30 years of China boom.
How long are they going to recover and dig themselves a hole? We are in the assets, the early assets actually are not in a bad place. Of course, if you're relying on subsidies, then it depends on the regime's willingness to honor their promise, right? Otherwise, 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. Having some of this position, actually, there is value that people haven't realized. This is not an earnings discussion anymore. This is a sort of a longer-term since we've brought it up. I take the opportunity to think about, you know, nothing you analysts can factor into the numbers. In the longer term, some of these portfolios actually, the so-called residual value is probably not factored in, right?
The same sites, maybe you have a 20-year PPA, but 15 years into it, you might actually put in new equipment already because it is much cheaper. It is much more efficient. The same square foot of solar panel can now generate double if you put it in. You score on the space, you are in the prime position to renew the next contract, right? Those are actually good. The new ones, you have to be careful because then increasingly you're pushing to the marginal places. Less wind, less solar, and so on. Of course, wind can change the actions. All those we can get into it. In short, I think renewables will continue to have its place in the energy mix. Energy transition is a trend that is well and alive for many reasons.
There's no reason to believe, you know, we would totally roll back into the past where, oh, so stop the renewables, then build coal plants. I think that is very, very far from the scenario. Hopefully, this is just my view. I could well be, you know, off or wrong, but I think, you know, 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? Would Senoko be bidding for the last remaining RFP for a 600-MW CCGT?
Spreads, like I say, with more capacity coming online unless demand spikes up faster than people expected, then you can expect spreads to continue to be weaker, right? 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. It is in the right place. It has the transmission. It has the land. It is close to all the customers that are surrounding it. It has even the best sources of gas supply. It has a pipeline in Malaysia. It has Sembcorp, the largest gas supplier, its shareholder. If anybody were to build the next 600-MW CCGT, it will be Senoko, if I had to say it that way. That's my view. I can't see who else would 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 a land? Who is your customer? Where is your 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. Five years later, we'll talk about how I can build you up. Frankly, right, think about it, right? That's the reason why I'm 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 in relation to our industrial estate business, 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, from a demand perspective, in the first half, you remain fairly robust. I think when we are looking into the second half, we do notice strength and demand continue to still be strong for the south, the northern parts, Fangner, Haiphong, Mangning, and even in the southern regions. In the central regions, potentially, there is maybe some questions that our customers are asking. Of course, the central parks are the smaller part of our parks in Vietnam. Earnings are still driven by the southern as well as the northern parks in terms of land sales.
One of the points that were brought out is that now that the tariffs are clear, are the customers still in more of a holding pattern or still have questions? 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. The other second question also is what defines transshipment because there is also the point where 40% is levied on transship activities. Without the clarity on what would constitute transship activities while the headline 20% is agreed, there is still some considerations for our customers. All in all, we continue to watch the space pretty closely.
Thank you. 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? 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? With that, the leaders of each of these businesses are also putting forth much more ambitious growth plans than we have announced to you in the past. 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 integrated urban solutions. As you can see, you know, Eugene is becoming very versed in the integrated urban solutions 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.
We do plan to come to you once we have established the new so-called, you know, ambition and growth plans for each of the lines of businesses that will guide how you can look at Sembcorp Industries in five years' time, right? 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? Sembwise was one of them. Now, that's a case in which we are trying to streamline the portfolio. 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? Those things can be part of the growth plan. Those are means to an end.
They are not by itself, you know, I cannot tell you that I sit here, then I, this CEO is just selling assets so that then I take the cash and then pay you dividends. It's not sustainable. There's only so much you can sell, right? I just want to clarify that. I'm glad the question asked about higher dividend payouts. I think our own track record has 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. Again, this round for six months, we have increased our payout 50%. You shouldn't expect that to come every year. 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.
I want to say, coming back again, that we are actually quite very confident and very comfortable with what we paid out last year, right? Without making this a guidance for the full year, we don't see today, I don't see anything that will derail us from that trajectory, right? The $0.23 that we paid last year is definitely a very comfortable level that we've been thinking about, right? I'm glad they asked about it because I was quite surprised that people start 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? It's useful to note because I think for us, it is on the one hand, a way to share with shareholders the success.
On the other hand, it reflects on our confidence because you, this team, those of you who have been following us will know that we've been actually quite prudent and, or some might say we are conservative when it comes to declaring dividends and putting up commitments of growth plans and so on. We generally want to err on the side of communicating less and then outperforming rather than the other way around, all right? The dividend is very comfortable. 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 in each of the business segments, we can see near-term value add that is well within our grasp, right? We see this as a very defensive stock, very safe in the current very volatile environment.
Sembcorp Industries should be a very safe investment with some upsides that you can see near-term. There will also be bigger upsides given our very strong balance sheet and a very strong Singapore dollar. All right. 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 one.