SembMarine shares could drop further after lack of corporate action from parent Sembcorp Industries

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Shares of Sembcorp Marine could fall further after the earnings announcement from parent Sembcorp Industries didn’t mention any corporate action.

The market had been watching for some form of corporate exercise from Sembcorp Industries, ranging from privatizing SembMarine, divesting it entirely, reducing its stake or a dividend in specie.

But the Sembcorp Industries’ press release, while announcing plans to pursue an IPO of its Indian operations, was vague on its plans for SembMarine.

”We are confident that Sembcorp Marine, a global leader in the offshore and marine industry, is well-positioned to benefit from the industry’s recovery with its active investments in new capabilities and technological innovations,” Neil McGregor, group president and CEO, said in the earnings release statement.

“We will continue to support the business through the cycle,” he said.

Set to face more market ire?

Shares of SembMarine tumbled 11.4 percent to end at S$2.33 on Thursday after its earnings disappointed. Thursday’s low of S$2.25 may offer the first support.

Even DBS, which remained positive on the stock despite the earnings miss, had noted that SembMarine shares were trading with an M&A premium it estimated at around 40 Singapore cents a share.

“This could be given back if privatisation rumour is off the table,” DBS said in the note on Thursday.

Daiwa, which was more negative on the stock, also had expected some repercussions if corporate action didn’t materialise. It had attributed much of the stock’s recent outperformance to expectations for a corporate exercise.

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