Sembcorp share price dances with potential India IPO

Post-demerger with Sembcorp Marine, Sembcorp share price turned bullish to hit a high of $1.69 on 13 November. Within a span of merely two months, Sembcorp share price rose a stunning 44%, making this counter one of the best stocks, if not the best, in Singapore Exchange.

Could rumours of the blockbuster listing of subsidiary, Sembcorp Energy India Limited (SEIL), sparked the explosive rally of Sembcorp share price? Even if the IPO did not materialize in 2020, the release of SEIL’s half yearly result on 13 November certainly gave Sembcorp share price plenty of boost.

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Sembcorp share price

SEIL announced a net profit of Rs3.57 billion ($55 million) for 1HFY2020, reversing losses of Rs164 million ($3 million) in 1HFY2019. The financial result of SEIL is certainly encouraging and will surely lend support to the IPO as it indicates that the market condition has improved in India. Against this backdrop, Sembcorp share price turned bullish for the couple of months.

In October, the management also implemented a slew of initiatives that helped to push up Sembcorp share price. The first was the redemption of the $1.5 billion bonds due in 2024. The redemption would achieve annual interest cost savings of approximately $25 million to $35 million. Following this news, Sembcorp share price went berserk and surged from $1.55 to hit a high of $1.70.

And then the management surprised the market by launching a series of shares buybacks starting from 29 October. By 6 November, 3.58 million of shares had been bought back from the market, providing strong support for Sembcorp share price. Yet despite the rising Sembcorp share price, the Price/Book Value remains at 0.530. This suggests that Sembcorp share price is still undervalued.

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. I am vested in this counter. Thus, the views expressed in this article may be biased.

Sembcorp share price in new era

The SEIL IPO is surely the biggest catalyst for Sembcorp share price. But besides this, the management is also [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: November 18, 2020 — 6:58 am

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