, Sembcorp Industries share price rocketed 140%. Is CEO Wong Kim Yin the Special One to bring Sembcorp Industries to the Holy Land? Since the explosive divorce with Sembcorp Marine, Sembcorp Industries share price had gone from strength to strength, surging from $1.18 in September 2020 to the recent $2.87. Within the span of nearly 2 years Given the splendid form of Sembcorp Industries share price, credit should be given to the Group CEO, Wong Kim Yin, who joined the Group only in July 2020.
In 2022, against the backdrop of a challenging operating environment, Sembcorp Industries share price confounded many investors by continuing its fine run. Year-to-date, Sembcorp Industries share price rocketed 42% (at the point of writing). Given that pandemic is not still not over yet and the world is still coming to terms with the fallout from the Ukraine-Russia war, the rampant run of Sembcorp Industries share price is indeed puzzling. What could be the driving forces for this counter?
In my assessment, the clue can be gleaned from the full-year annual report. The annoying thing about Sembcorp Industries is that the company stopped publishing quarterly financial result since 2020 after SGX waived off this requirement. Thus, investors can only form their investment thesis based on half-year or full-year financial results.
In early 2022, Sembcorp Energy India Limited (SEIL), has signed a long-term power purchase agreement (PPA) to supply 625 megawatts of power to Andhra Pradesh state power distribution companies for 12 years. Subsequently, Sembcorp Energy India Limited (SEIL), signed a power purchase agreement with PTC India Limited to supply 200MW of power to Bangladesh till May 2033. The former will commence in 2023 while the latter was expected to commence operation in the first half of 2022.
Given that the 625MW contract has yet to commence operation, I am of the view that Sembcorp Industries share price should continue to rise in the second half of this year. To put the icing on the cake, the management shared that their first supercritical power plant operated at a higher plant load factor (PLF) of 84%, compared to 78% in 2020. Losses for the second supercritical power plant narrowed as it benefitted from higher tariffs with average spot prices increasing more than 50% from a year ago. With the increasing power prices in India, I foresee a turnaround for the second supercritical power plant in this year.
Over in Singapore, the Uniform Singapore Energy Price (USEP) has risen more than 300%, surging from $100.3 per MWh in May 2021 to $310.19 per MWh in May 2022. The sky-high electricity prices in Singapore should benefit the company’s subsidiary, Sembcorp Cogen. The Conventional Energy business segment contributed the highest profit to the Group in FY2021. Henceforth, the performances of the Singapore and India conventional energy businesses should provide the impetus for Sembcorp Industries share price to continue its climb in the coming months.
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 faces long-term uncertainty
Despite the glowing short-term outlook, the Group faces much uncertainty in the long-run, which caused me to divest the stock in late 2020. One of my biggest concerns for Sembcorp Industries share price is [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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