SembCorp Industries

Bopian what, stock. Prices go up and down. Besides retirees should be having well diversified income portfolios right , with other more resilient stocks to take up the slack from a dropping sembcorp



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I am not sure should retiree have SBI in their Portfolio at all.

Shipping has been hammered for a long time. The oil and gas has not look good for some time already. There is a market changer with Shale gas. Investment in India should be considerable risk. Anyone in this need to TIME their investment. I feel this is not for player who survive on dividends like before. For people who still vested, future can be anything as it's fate is determined not only by Oil Price but Shale Oil being even more nimble after the "saudi challenge". What not kill it make it much stronger.

The price is getting more interesting by days. Probably time to relook at it again.
I am curious of SCI picture excluding ScMarine & gallantV. Will find time to drill in.

Believe the Marine sector should be almost fully discounted by now , any upturn of this sector will be regarded as bonus .

The macro headwind is ominous.

A large oversupply with numerous tankers berthing out in sea (i see this almost everyday at Changi Anchorage Point) tells me it will take a long while to work through. With US being the price capper due to its shale technology, many oil majors will not embark on new projects which have break even of US 60/bbl. This is a far cry from the 2-3 years back where they will order many jack up rigs/etc for 80/bbl breakeven projects.

The marine industry is therefore producing very little new rigs and will have to rely on maintenance as its revenue generator. And if the marine sector wants to go down the value chain to shipbuilding, you are fighting with the Korean/Chinese yards who are facing their own overcapacity problem. Simple solution: Just reduce headcount and move all yards to Tuas and sell the land of other yards back to govt.

Wait for the sti to drop first. Dun later like smrt drop down and delist, opmi lose money...

Interest rate rise coming and Clinton jialat markets sure correction one.

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There is no point to try to time the bottom of the industry. Let the fundamental work out itself. So I say let it past and we can ride on it after.

(29-10-2016, 10:54 AM)ksir Wrote: The price is getting more interesting by days. Probably time to relook at it again.
I am curious of SCI picture excluding ScMarine & gallantV. Will find time to drill in.

In theory, it would be prudent to do a sum of parts and value SCI based on its utilities and infrastructure biz only, with the marine biz thrown in as a bonus.

But i think in practice, the marine biz (SCM) has to be viewed as a major liability. SCM has spent 850mil SGD on EJA (Brazil shipyard) and ~1.5bil SGD on SIV@Tuas Phase1/2. With the Sete Brasil suspensions, Transocean (2 drillships on 5/95 terms)'s delivery push-back and only 1 more PC-400 jack-up project, it is mainly left with the FPSO P-68/71 and non drilling solutions work at EJA and SIV@Tuas respectively. Although part of its liabilities are nicely spaced out (eg. the 7yr/15yr 600mil bond issue by Jurong Shipyard in 2014), i think that its 1.0X net gearing will require a cash call soon as these work may not generate enough FCF to pay down the debts. Out of its 6 completed/almost completed but undelivered jack ups (3- Oro Negro, 2 - Perisai and 1 - Marco Polo), 3 of them looks gone for sure. April2017 (when FY17 concludes) will have more write-downs for sure, and i suspect it is not going to be the end.

recent SOTP assessment by DBS on 28/9/2016 a month ago when share price around $2.50.

Sembcorp Industries buy TP $3.10 DBS

Not much change since then. Coal prices have gone through the roof recent quarters so india utilities might get hit in next few quarters. If Singapore goes into recession it might hit the utilities side as well. Sembcorp Marine will likely have to be CUT OFF or consolidated somewhere else to stem the bleeding.