straits times index stocks undervalued

KEPPEL CORPORATION, SEMBCORP STOCKS: WHAT’S NEXT?

Dear readers, Sembcorp Industries stock saw much selling on 29 May 2020. Sembcorp Industries stock went south by 9.93%. Its subsidiary stock, Sembcorp Marine stock also declined by 2.86%. Since I always looked at Sembcorp Industries stock and Keppel Corporation stock in a pair (as both are Singapore’s offshore and marine conglomerates), I decided to look at how the Keppel family of stocks fared on the same day (i.e. 29 May 2020). The performance of Keppel family group of stocks are as follows:

KepPacOakReitUSD: +9.7%

Keppel DC Reit: +4.05%

Keppel Infrastructure Trust: +3.88%

Keppel Reit: +0.94%

Keppel Corporation: -1.01%

As contradictory to the movement of Sembcorp Industries family stocks, I think the strong showing in Keppel family of stocks has to do with the recent release of Keppel Corporation 10-year roadmap. Investors may feel pleased to know the roadmap ahead of the rather diversified conglomerate and what its focus will be in the decade ahead. As a recap, Keppel will focus on the four areas below in the decade to year 2030.

renewables

environmental solutions

near-shore floating infrastructure

connectivity solutions including green data centres and smart-district development

As reported, Keppel aims to become a “powerhouse of solutions for sustainable urbanisation”

For Sembcorp Industries, while I could not find the reason behind the steep decline in its stock price on the public domain, some commentators cited the decline might be the removal of Sembcorp Industries stock along with ComfortDelgro stock, SATS stock and SPH stock from the MSCI Singapore Index following a review. Mapletree Logistics Trust was added to the MSCI index.

Going forward next, I think Sembcorp Industries and Sembcorp Marine will continue to be neglected unlike there is a positive catalyst like consolidation in Singapore’s offshore and marine sector. For Keppel Corporation group of stock, post the release of the ten-year roadmap, investors are likely to focus on the group’s execution of its plan amidst the current challenging business landscape.

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