Sembcorp (SGX: U96) (OTCPK: SCRPF) shares are up 8.75% today. The U96 share price rise seems to be a delayed reaction to Friday’s announcement of the results. Which showed a decent increase in profits. So, logically, we should see that rise today. But it’s worth noting that share price rises don’t necessarily all come in one fell swoop. Revaluations - especially if they’re about the general prospects for the future of the company - can take their time to happen.
The results at Sembcorp; “ENERGY company Sembcorp Industries posted a 56 per cent rise in net profit to S$608 million after accounting for the disposal of its Indian coal business and one-off gains for the six months ended Jun 30, on a continuing-operations basis. These one-off gains comprised S$5 million in divestment gains from the sale of the group’s water businesses in Indonesia and S$1 million in negative goodwill from acquiring 49 per cent of a joint venture in the solar business in Vietnam.” The one off gains - absent the coal business - were not material to the business therefore.
Both the renewables and the conventional energy businesses did well: “Net profit before EI for the Renewables segment was S$117 million, an increase of 54% from S$76 million in 1H2022.” and “The Conventional Energy segment posted net profit before EI of S$435 million, an increase of 47% from net profit of S$296 million in 1H2022. The increase in contribution was mainly due to higher electricity prices in Singapore.” Clearly the conventional business was the major driver of that profit increase.
Sembcorp Industries share price from Google Finance
That price cap back in June didn;t have much effect on Sembcorp: “Sembcorp Industries (SGX: SCIL) dropped up to 12% yesterday as the authorities announced a form of price cap on wholesale electricity prices in the Singapore market. Some of that loss has been gained back today as more mature consideration of that price cap kicked in. The general belief is that while it will have an effect - yes, of course price caps do, otherwise why would anyone ever bother to have price caps? - that effect won't be all that large. Thus the initial gloom was somewhat overdone.”
We’ve also looked at U96 here: “Sembcorp Industries (SGX: U96) shares are down 3% in Singapore today. The fall appears to be the decision announced that they'll not be selling the waste management unit, SembWaste. This after months of mulling it over but the announcement that it'll not be happening has not been - so far at least - explained.”
Our read on the current share price movement is that it is just that reaction to those better results. Sounds pretty obvious and also fairly boring but there it is - nothing specific, just higher profits.