Tuesday, June 18, 2024


Dhaka Tribune

Seatrium (SGX: S51) up 5%, we assume on merger reconsideration

Sembcorp Marine and Keppel merged to produce Seatrium

Update : 12 Jul 2023, 03:11 PM

Seatrium (SGX: S51) (OTCPK: SMBMF) shares are up 5% in Singapore. S51 shares don't have any specific announcements to go along with this price change but it was the leading trade on the Singapore stock exchange today. The one thing we can be sure of is that the OTC quote in the US, SMBMF is likely to go higher as well - but liquidity there is such that we're not certain that a 5% rise would actually cover the bid/offer spread. Sadly, that can just be true of OTC stocks, however large the underlying company. 

Sembcorp Marine, which merged with Keppel to create Seatrium, did have problems to do with Brazil a few months back: “Sembcorp Marine (SGX: S51) shares dropped significantly last week as news came through of a corruption inquiry into Sembcorp's Brazilian subsidiary. As we noted at the time the idea that there might be corruption in a government supply contract in Latin America might not be the biggest surprise ever to hit capitalism or stock markets. As it has turned out that seems to be the market reaction as well. Sembcorp shares have regained their losses and that's not because the market price level as a whole has risen that much. Rather, because on mature consideration this worry about corruption in Brazil is not wholly material to any valuation of Sembcorp as a whole.”

Seatrium share price from SGX

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.” Seems fair enough, change the structure of the business then why not change the name of it at the same time?” 

As this now much larger company Seatrium is valued at the $6.6 billion sorta level. That makes a 5% move a substantial change in market sentiment. But as far as it is possible to see that's exactly what this is. There is no other specific move. There's some talk about how they will expand the order book in 2024. But that's obviously a speculative thought there.

We're seeing a change in market opinion on Seatrium rather than any one particular event that it's possible to pin the share price move upon.

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