Sembcorp Industries share price in hypersonic boom!
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, Sembcorp Industries share price rocketed 140%. 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.
Sembcorp Industries in cheeky run!
Sembcorp Industries in India nightmare
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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Would you mind to comment why Geo Energy and Rex international share price keep dropping for past 3 months? It seem like not logical when the coal and oil price are high, and both companies are making better profit.
Hi Sir,
Sure, will do a review on Geo Energy and Rex International. Thanks.
Regards,
Gerald
https://sgwealthbuilder.com
Gerald,
Thanks to lighten me the reasoning of why Geo Energy stock going south while the profit is super high, it seem to me at this juncture, all counter under the SGX Engery sector are all become un investable, all are making better profit but share price are dropping like the rock, e.g. like Rex international, I remember not long ago, all Analysts under survey said the counter is valued at least $0.58 to $0.65, but actual thing happened, the counter at today is only traded as $0.270, not even half of it value! May you lighten us the scenarios.
Hi Mr Koh,
Thank you for your comments. You need to realize that analysts may be good at forecasting a company’s business outlook. But let’s face it. Analysts cannot predict the future nor can they dictate the short-sellers’ movements. For Rex International, you would realize that the counter peaked in March when the crude oil price peaked. Subsequently, when crude oil fell, the counter dropped as well. During that time, the level of short selling rose. That’s the problem for many penny stocks in SGX. Many of them are prone to volatility caused by the short sellers.
Regards,
Gerald
https://sgwealthbuilder.com
I see, the short Sellers are the one, make the market become unpredictable, why SGX don’t regulate them? To some extent, encourage them to short the counter at very low fee.
I don’t think this is fare to the genuine investor and the good performance companies listed in SGX.
Hi Mr Koh,
From the perspective of a retail investor, I do agree with you. But I am not sure if regulation will work. I do think that the change in the borrowing fee of Securities Borrowing and Lending (SBL) programme plays a major part in the short selling activities since 2019.
Regards,
Gerald
https://sgwealthbuilder.com