SembMarine hit with trading query after sharp share price spike

Its share price surged after a massive loss.

The Singapore Exchange has issued a trading query against Sembcorp Marine following the unabated rise in the rig builder’s share price.

SembMarine, which reported its first full-year loss in over a decade on Monday, saw its shares surge by 7.5% in Tuesday’s trading session. The counter closed at $1.57 per share, compared to Monday’s closing price of $1.46 per unit.

The group’s share price continued to rise in early trading on Wednesday. It was one of the top gainers as of 11:30 AM, with the counter up 4.8% to $1.645. Some 4.3 million shares have changed hands.

Analysts reckon that SembMarine’s surge might be driven by a possible privatisation by its major shareholder Temasek, or by its parent company Sembcorp Industries.

“The possible privatization of SembCorp Marine, either by its parent company, Sembcorp Industries, or more possibly by Temasek, could cause an upward rerating catalyst for the stock,” said Joel Ng, analyst at KGI Fraser.

In the fourth quarter, SembMarine reported a staggering net loss of $537m, on back of large provisions for Sete Brasil drillships and other rigs under construction.

“SembMarine is currently trading at its 20 year trough valuations and a privatization angle would make sense in the long term, especially given the strategic importance of the two major Offshore & Marine yards to Singapore’s role as a leading global marine hub,” Ng said.