On Friday, CLSA analyst Horng Han Low upgraded Sembcorp Industries (SCI:SP) stock rating to High-Conviction Outperform from Outperform, along with an increase in the price target to SGD7.50 from SGD7.00. The revision reflects a positive outlook on the company's growth prospects despite a general downturn in global renewables investment.

Sembcorp Industries is expected to benefit from several strategic developments. Firstly, the potential increase in its stake in Senoko Energy could bolster earnings per share (EPS). Secondly, the expansion plans of Micron (NASDAQ:MU) scheduled for 2026-27, along with additional power supply contracts from data center customers, are poised to contribute to the company's growth. Thirdly, the commencement of a 600MW plant in 2027 is anticipated to enhance the company's operational capacity.

The analyst noted that while China's curtailment policies have impacted the renewables sector, Sembcorp Industries' renewable energy investment target of approximately $500 million remains achievable. This is due to higher tariffs in India, as well as expansion efforts in Southeast Asia and the Middle East, which are expected to support EPS.

In light of these factors, CLSA has raised its EPS estimates for Sembcorp Industries for the fiscal years 2024 through 2026 by 14-24%. The firm's revised price target and upgraded stock rating reflect confidence in the company's ability to navigate the challenges in the renewable energy market and capitalize on emerging opportunities.