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8 hours ago
(Yesterday, 11:44 AM)Shrivathsa Wrote: Pretty good results, https://links.sgx.com/FileOpen/FY2024%20...eID=833750 though from Friday's market action it looked like the market expected better results.
In some ways I guess this is why the management was doing those buybacks through 2024.
Was very skeptical then about it. Have to admit that the management knew what they were doing.
Finally some relief for long suffering Sembcorp Marine shareholders after being hammered over the last five years plus.
Hi Shrivathsa,
I had been skeptical of the SBB since it started ~8months ago and IMHO, this skeptism hasn't been proven wrong yet.
For a start, their weighted average cost of debt for 2H24 is 4.9% (slide23 of ppt). Based on FY24 year end EPS~4.6cents and assuming an average SSB price of 1.80sgd, that translates to PE 1.8/0.046 ~ 39 or earnings yield of 2.6%.
In essence in FY24, Mgt used ~40mil to buy annual earnings yield of 2.6% where the same capital may had been used to pay down debt that cost 4.9% annually. FY25 earnings will have to 2x just to reach parity with the alternate usage to pay down debt, by end FY25.
Seatrium wrote down ~20% of their PPE or a whopping 1.1bil in FY23. My guess is that this largely contributed to the ~40mil reduction in PPE depreciation in FY24. This 40mil more of a "kitchen sinking effect of FY23" than a true earnings improvement, if you know what I mean.
In summary, Seatrium is a capital intensive project based business. So the higher the project wins (which will also translate to higher future earnings), the more working capital it will need too. Therefore, it is really puzzling why they had spent 40mil in the last 6 months to do SBB when there seems to be so many other obvious places to place that capital. Of course, all these could be just me, a keyboard warrior nobody imagining things up.
