Seatrium (SGX: S51) (OTCPK: SMBMF) shares are down 3.5% today. S51 shares don't seem to have any specific news to drive them lower. Our assumption is, therefore, that the recent volatility is around a certain nervousness over the upcoming results. Or, when it's rising, a certain lack of nervousness over those upcoming first-half results. This does all sound a little wishy-washy but in the absence of any news releases - and given that those results are only 10 days away, there won't be releases from the company until then - it will just be sentiment which drives the Seatrium share price.
As we noted just recently about Seatrium: “As to the merger: “Seatrium (SGX: S51) is the former Sembcorp Marine. No, the name change was not all about that Brazilian corruption inquiry - that's all dealt with anyway. Rather, there was a merger of interests and a name change seemed like a sensible thing to do at the time. “ Singapore, 3 April 2023 – Sembcorp Marine Ltd (the “Company” or “Sembcorp Marine” and, together with its subsidiaries, the “Group”), is proposing to change its name from “Sembcorp Marine Ltd” to “Seatrium Limited” following completion of the combination of the businesses of the Company and Keppel Offshore & Marine Ltd on 28 February 2023, and will adopt a new branding for the enlarged entity.””
There was, before the merger, that worry about the Brazilian problem but that's all been solved: “It's possible to wonder though for of course there was that story about Brazilian corruption. This did cause serious damage to the share price, for a time. The report was that Sembcorp's Brazilian subsidiary was being investigated in a corruption inquiry. Well, yes, it was. But nothing to do with current activities at all. This was all entirely historical activity. “
Seatrium share price from SGX
The next news release from Seatrium is likely to be those first-half accounts: “SL will be releasing its 1st half 2023 financial results on 28 July 2023 before trading hours”. This will give us our first good look at how things are going after the merger. Of course, much of the trading period they were still different companies, Sembcorp Marine and Keppel. But we should get an idea of the full cost of the merger itself and also a trading forecast for the current and immediately future period.
The volatility in Seatrium shares comes, we think, from no one quite knowing how they're going to approach the merger. One option is to write down everything, left right and centre, to provide a clean sheet for the business going forward. Another is to instead point out how lovely things are now the merger has happened. It's not so much that one or the other is the correct and perfect approach.But which will they emphasise?