In my last article, I wrote that I have exited Sembcorp (U96) at $1.85 in December 2020. Indeed, the stock never really hit above $1.85 since my exit. But on 23 Feb, both Sembcorp (U96) and Sembcorp Marine (S51) share prices unexpectedly stirred back to life to increase marginally upon the release of full-year financial results for FY2020. What on earth has happened?
Given that Sembcorp (U96) suffered almost $1 billion of losses, a member of SG Wealth Builder wrote in to enquire why Sembcorp (U96) did not suffer a catastrophic meltdown but rose slightly instead. I will share my view on Sembcorp Marine briefly and then provide an in-depth analysis on Sembcorp (U96).
In my opinion, it is within expectation that Sembcorp Marine would incur heavy losses for FY2020 as COVID-19 led to various project stoppages and delays. Certainly, it is not light at end of tunnel yet. But the $2.1 billion rights issue had provided a crucial lifeline to Sembcorp Marine. In addition, Sembcorp Marine is also pivoting its business to green energy as the Group is actively tendering for more than 10 projects in Renewable Energy and Gas Solutions. These are certainly encouraging news for Sembcorp Marine investors.Read more