Sembcorp Industries share price in India nightmare

LIFETIME MEMBERSHIP My last coverage on Sembcorp Industries share price was in February 2021. That was before the devastating second wave of COVID-19 infections took place in India. With a significant business exposure in India, what would be the impact levied on Sembcorp Industries share price? So far, the management had updated that its assets in Myanmar continued to be in operations despite the civil unrest. But there were no updates on the situation in India. On this note, investors have every reason to be concerned about Sembcorp’s India operations.

Sembcorp (SGX: U96) share price worth $4?

Sembcorp Industries share price gave me 37% return!

Sembcorp Industries share price

Given the situation in India, there are plenty of uncertainties for Sembcorp Industries share price. It doesn’t help that there are no business updates for the 1st quarter financial performance. The Group is not required to file quarterly results as SGX had ceased the quarterly financial reporting requirement. Without clarity on this significant downside risk, investors are left wondering how Sembcorp Industries will fare in the upcoming 1HFY2021 financial result.

Through Sembcorp Energy India Ltd (SEIL), Sembcorp Industries has $1.57 billion worth of ownership interest in India. SEIL has wind, solar and thermal power assets (P1 and P2). Due to COVID-19 pandemic, net profit from India operation was $50 million, compared to $100 million in 2019. The drop was attributed to the lower demand in India, which declined 3% on a year-on-year basis, and Indian Energy Exchange (IEX) spot prices were 21% lower in 2020 compared to 2019.

The contribution from India would have been worse if it is not for the exceptional $98 million claim in favor of Sembcorp. Given the lock downs in India, it is only reasonable to expect the energy demand for industrial in India to plummet. In this regard, I fear the worst for Sembcorp Industries share price in the coming weeks.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested in Sembcorp Industries share currently. Whether Sembcorp Industries share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Sembcorp Industries share price in explosive destiny

With a 5-year beta of 1.00, Sembcorp Industries share price had become increasingly volatile. The explosive run of Sembcorp Industries share price has certainly caught many investors by surprise. Year-to-date, Sembcorp Industries share price had surged by almost 26%. After the massive losses of $997 million recorded in FY2020, investors must be banking on an upswing in FY2021 (net profit from continuing operations in FY2020 amounted to $157 million). Despite the euphoria for Sembcorp Industries share price, investor must realize that this is a long-term project.

Let me be clear about this: Rome is not built in one day. The new pivot for Sembcorp Industries will take years to materialize. On this basis, investors must have the patience for this counter. Previously, I wrote that Sembcorp Industries share price could reach $4.00. That day will [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: June 15, 2021 — 9:25 am

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