Dear readers, recently two Straits Times Index (STI) stocks were of highlights to investors. First, Keppel Corporation stock which announced that it would be selling $3 billion to $5 billion of its assets in the next three years. And secondly Singtel stock which has announced a change of its new CEO with the retirement of the current CEO. With these announcements, the investing fraternity is abuzz with the likely mergers, acquisitions and privatisations that could result from these corporate moves.
Right on the mind of investors is the resurfacing of the possibility whether Sembcorp Marine stock will be merged with Keppel Offshore and Marine, leading to a privation of Sembcorp Marine stock ultimately. There has been much speculation on this for years and investors are still speculating on the possibility of whether this privatisation could be materialized even with the recent move of Sembcorp Industries on its subsidiary Sembcorp Marine.
Now, I will go into two other possible mergers, acquisitions and privatisation that I thought about as follows.
First, a possible divestment of Singtel’s 21.74% stake in Singpost. Singpost stock has not been doing well and it does make some business sense for Singtel to divest its stake in Singpost as it focuses on its core offerings to customers locally and abroad.
Next, also on Singtel. As Singtel scales up its focus in 5G and data-centric areas, I believe that Singtel is likely to look at increasing its portfolio of data centres. When it comes to data centres, Keppel DC Reit should come to the mind of many investors right away. However, I do not foresee Keppel divesting off its stake in Keppel DC Reit given that Keppel has said data centres is one of its key focus going forward (along with environmental solutions, renewable energy and integrated urban development and asset management). Instead, I believe Singtel and Keppel Corporation will be looking at the data centres in the following Reits for possible acquisition: Mapletree Industrial Trust (which has 39% of its portfolio in data centres as of Jun 20) and Ascendas Reit (which has 17% of its portfolio in data centres as of Jun 20).
Finally, back to Keppel Corporation, as Keppel Corporation consolidates its focus in its portfolio, I believe Keppel Corporation will divest its 24.4% stake in Dyna-Mac, 6.24% stake in Penguin International and a 40% stake in Kris Energy.
Back on Straits Times Index (STI) stocks as a whole, it is regrettable that many of these stocks have become laggards as compared to their share performance in previous decades. This is inevitable since many of these STI stocks have benefited well from the industrialization of Singapore rapidly. Now the Singapore’s markets seem saturated and many of these companies go overseas or diversify and face more challenges in the process. Then there is the added context of a very competitive and volatile geo-political landscape to grapple with.
It is against this lacklustre Singapore stocks backdrop that makes chatter of possible mergers, acquisitions and privatization of Straits Times Index and Singapore stocks particularly interesting for the Singapore investing community.
That’s it for my insights today. I Thank you once again for your support of SG STOCKS INVESTING, your Money and Lifestyle magazine! Connect with me here to follow the daily exciting and useful posts on these two blogs, Thank You for your support!
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