Sembcorp Industries share price ready to fly?

NDP Special Offer! On 19 July 2022, Sembcorp Industries issued a profit guidance that the “financial results for 1H2022 is expected to be materially higher than 1H2021”. In this regard, investors should expect plenty of fireworks for Sembcorp Industries share price on 5 August 2022. However, before Nirvana can be reached, investors must put on their seat belt as stock market may be roiled yet again by the upcoming US FOMC meeting which herald another interest rate hike.

Being an utility company and waste management company, Sembcorp Industries’ businesses are deemed defensive, serving as an hedging investment amid the inflationary environment. Against the backdrop of soaring commodity prices, the Group’s Conventional Energy business is expected to be given a strong tailwind due to the strong energy demand and higher margins.

Sembcorp Industries share price

For FY2021, Conventional Energy business was the largest profit contributor as the segment raked in $174 million of net income. If it’s not for the $212 million impairment of Chongqing Songzao power plant incurred, Sembcorp Industries would have posted a significantly larger profit for FY2021. Henceforth, all eyes will be on the performance of the Conventional Energy business this year.

In FY2021, Singapore and India markets contributed 62% and 19% of revenue respectively. In Singapore, 95% of the electricity is generated using natural gas as raw materials. So the key index that would affect Sembcorp Industries share price would be the price trend of natural gas as it would affect the profit margin. On the other hand, Sembcorp’s thermal plants in India uses 70% domestic coals and 30% imported coals. Thus, the other index that would affect Sembcorp Industries share price should be the price trend of domestic and imported coal prices in India.

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 on steroid!

The soaring interest rates and raging inflation had thrashed global stock markets, sending growth stocks into a devastating tailspin. Yet, Sembcorp Industries share price rocketed 47% year-to-date. 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.

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 supersonic form of Sembcorp Industries share price has astonished many investors. What could be the catalysts for this counter?

In my assessment, the clue can be gleaned from [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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