All in SembCorp Marine
Going green and electrification is a trend that I'm betting on big in the next 10 years going forward. But with everyone is so fixated on the US and CN EV companies like $Tesla(TSLA.US$ and $NIO Inc(NIO.US$, I think there is little opportunity for a outsized returns (I.e. low risk, high reward).
However, I think that $Seatrium(S51.SG$ is a potential company that can provide this skewed risk reward payout.
With it's merger with $Keppel(BN4.SG$ O&M, it will be the biggest shipyard in Asia. Plus they are moving very fast into green technologies for ships, and green power generation in the sea such as floating solar farm. With so much more EV in the world, we definitely need so much more green electricity generation to replace petrol. With limited land space, the sea is a great expansion for green energy.
Plus $Temasek Holdings(BK2536.US$ owns 54.6% of this company so I'm sure there will be tons of government grant that will keep this boat afloat. Thus lowering the risk profile.
With such a good setup of cheap, undervalued, "artificially lower risk", and huge upside potential, that's why I hold a significant shares in this company![]()
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However, I think that $Seatrium(S51.SG$ is a potential company that can provide this skewed risk reward payout.
With it's merger with $Keppel(BN4.SG$ O&M, it will be the biggest shipyard in Asia. Plus they are moving very fast into green technologies for ships, and green power generation in the sea such as floating solar farm. With so much more EV in the world, we definitely need so much more green electricity generation to replace petrol. With limited land space, the sea is a great expansion for green energy.
Plus $Temasek Holdings(BK2536.US$ owns 54.6% of this company so I'm sure there will be tons of government grant that will keep this boat afloat. Thus lowering the risk profile.
With such a good setup of cheap, undervalued, "artificially lower risk", and huge upside potential, that's why I hold a significant shares in this company
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bwjx : Thanks. Will checkout this company. So is Byd and Sembcorp on my watch list now.
doctorpot1OP bwjx: Just note that the company currently is very cyclical and is now in the valley stage. plus the covid impact cause a labour shortage so it is going to be challenging. due to that they might need to raise a 3rd round of capital as well. so if you are investing, better have some reserves as well in case of that too
Upncoming1841 : I am a short term investor for this particular stock. Buying in anticipation of a price boost when the merger with Keppel O&M occur by end Mar. I think both Keppel Corp and Sembmarine will benefit from the merger, but the latter offers greater leverage due to its comparative low price.
doctorpot1OP Upncoming1841: I'm going for the long term, cause the merger deal terms not confirmed yet. one side may end up having the better deal so it could still have a short term swing. Hope it is a fair deal
Upncoming1841 doctorpot1OP: I am banking on Temasek, being the largest shareholder, to exert some influence to ensure a good deal for Sembmarine. Hoping only.
doctorpot1OP Upncoming1841: yea same same. Temasek also a significant shareholder in Keppel hahahaha. left hand right hand.
Always Growing doctorpot1OP: Pardon my ignorance, does this mean entering later and meanwhile, save up war chest? Just a passing thought, every time I hear “Temasek Holdings”, the name “Hyflux” appears in my mind
doctorpot1OP Always Growing: I will have a lengthy reply so let me take it piece by piece. will take some time, so maybe let me clear the Temasek Hyflux misconception first. Temasek invested in Hyflux in year 2000 and they sold all shares of Hyflux by 2006. so when Hyflux screwed up, Temasek was already not an investors in it.
if Temasek was still an investor in Hyflux, I doubt they will let Hyflux screw up so bad. and if Hyflux really screw up, they have the money to back them up so that they won't collapse. just my 2 cents.
https://www.temasek.com.sg/en/news-and-resources/news-room/statements/2019/STLetter-Hyflux
Always Growing doctorpot1OP: Gee, thanks for clearing the air…. I didn’t see the full picture.
doctorpot1OP : Offshore and Marine industry is generally cyclical means the demand for their product goes up and it goes down, so you see price also go up and go down. so right now for SembMarine, it is in the downward phase. No one know if it is the bottom already. it could still drop even more, it could be at the bottom, it could be on the recovery phase. So when to enter, you should evaluate for yourself.
SembMarine a bit unlucky, they entered the downward phase when the oil price tank, then when the oil price recover, covid hits and there is not enough manpower to build lots of ships. So to survive the downturn, they need to raised capital/money. they did so by rights issues. twice.
So rights insurance is just like "creating" more shares to sell to their existing investors. But you can choose not to buy also la. This is done so they can have money to burn while the business is trying to turn around. But at the same time, it is damn bad for investor because if you don't buy it your existing share drops in value because of dilution. If you buy it means you need to put more money at risk. The lucky thing for SembMarine is Temasek support them for both rights insurance, where if nobody buy, they will buy everything. so SembMarine confirm get money to tide through the tough time de.
So if you invest now, there is a risk that they may need to raise another round of capital. so due to that, you may end up having to put in even more money then needed. but there is also a chance they don't need to liao, or they will get bank loan.
So for me cause I invested so I have kept spare cash (2x what I invested in SembMarine) in case there is a 3rd round. Which I pray hard don't la.