Company background
SP Group is an energy utility company in the Asia Pacific. It owns and operates electricity and gas transmission and distribution businesses in both Singapore and Australia, and implements sustainable energy solutions in Singapore, China, Vietnam and Thailand.
The SP Group’s core business segments comprise a Transmission and distribution business, Market Support Services and Others (such as providing Sustainable Energy Solutions).
SP Group’s transmission and distribution business is driven by the Electricity T&D Business and also the Gas T&D Business in Singapore.
SP PowerAssets (SPPA), a wholly-owned subsidiary of SP, is the sole Transmission Licensee in Singapore.
SPPA owns and maintains the electricity transmission and distribution network that delivers power to electricity consumers in Singapore.
In Australia, SP Group also holds an interest in SGSPAA, an Australian company which is engaged in the transmission and distribution of electricity and gas in Australia. As of June 30, 2022, SP Group owns a 40% interest in SGSPAA.
In the gas sector, PowerGas, a wholly-owned subsidiary of SP, is the sole Gas Transporter Licensee and gas system operator in Singapore. It owns, operates and maintains the gas transmission and distribution network that delivers both natural gas and town gas to gas end-users in Singapore.
Additionally, SP group is also a wholly owned subsidiary of Temasek, which is in turn wholly owned by the Government of Singapore through the Ministry of Finance. Temasek is an investment company headquartered in Singapore with a diversified investment portfolio.
Corporate Structure
Source: SP Group
SP group’s financial for FY2022 (ending 31st March 2022)
In its FY2022 results, SP Group reported net revenue of $2.45billion. This is 2.95% higher YoY as compared to $2.38 billion back in FY2021 and this was due to the increased revenue in all segments such as higher sales of electricity because of power purchased at higher costs, which is a pass-through cost, as well as higher use of system revenue and gas transportation revenue.
Although the SP Group’s EBITDA was reported at $3.39billion in FY2022 – which is roughly an 80% increase as compared to $1.88billion in FY2021 – this was due to a one-off gain from the disposal of interest in an associate of $1.53 billion. The gain arose from the disposal of the group’s interest in AusNet Services on 16th February 2022. Hence, excluding the one-off gain on disposal, the adjusted EBITDA for FY2022 would be $1.85billion.
In terms of its credit metrics, SP Group has a credit rating of Aa1 (Moody’s) and AA+ (S&P). The group’s total debt to capital ratio for FY2022 is at 24% and this is 4% lower than its FY2021 at 28%. Interest coverage ratio (excluding the one-off gain from the AusNet divestment) is also at a very comfortable level at 22 times in FY2022. Cash and cash equivalents have also increased from S$1.18 billion in FY2021 to S$4.20 billion in FY2022. This increase was also primarily due to a cash consideration received by SP Group from the AusNet divestment. Lastly, SP Group also have S$500 million worth of undrawn bank facilities if they ever require it.
Debt Maturity Profile & Debt Breakdown
SP Group’s debt maturity profile is also spread evenly across the years while also locking 94% of their debts into fixed income instruments to mitigate any interest rate fluctuation risk. All in all, SP Group is the sole electricity and gas T&D operator in Singapore, and has a strong financial profile and prudent financial management. So, investors may consider adding the group’s bonds into their portfolio mix. SP Group did a non-deal roadshow on 19th October 2022. Investors in Singapore would love to see their new SGD deal and demand should be strong if priced correctly. Do remember to do your own due diligence as well.
SP Group Outstanding Bonds as of 31st October 2022