24 Jun 2020
Sembcorp Marine Ltd (SGX: S51) and Sembcorp Industries Limited (SGX: U96) are going to separate. What are your thoughts?
Sembcorp Marine and Sembcorp Industries announced on 8 June 2020 that there'll be a rights issue to raise money for Sembcorp Marine and a demerger of the two companies. Do you like the deal?
This deal is definitely good for Sembcorp Industries holders!
For Sembcorp marine holders, not subscribing to the rights will dilute existing shares.
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If you are owner of SCM shares right now, the best option is to buy the stock at $0.20 per share.
A great example will be SIA rights issues.
During the Rights Issue Exercise, SIA offer $3.00 per share and the market price nose dive to under $3.50 per share.
Case in Point:
SGX Blue Chip Stock - Market sentiment always regard these stocks as high valued stocks and it would be unthinkable for it to go below $3.00. Temasek and SIA managment has already calculated the risk and determine the value at $3.00 which means they were pretty confident market forces will not push it below $3.00.
In the event, there is no traction to buy the shares, Temasek will buy up. This is win-win.
As you can see, right after the Exercise was completed, SIA rebounded above $4.00 per share.
So based on these recent examples and huge financial backing from the Temasek, they have probably made their calculations.
SCM issuing shares for $0.20 per is unprecedented and it spooks investors but it should be a no-brainer for anyone with logic and sense.
Of course there is every possiblity the shares will nosedived but the probability is low.
I own S51 shares and this is a no-brainer to buy in the shares at $0.20 per share. My expectation that it would hover aroung $0.50 per share after the rights issue.
The whitewash resolution may not pass, and if it doesn't, the entire deal (SCI and SCM rights issue ...
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