Sembcorp Industries Ltd.’s worst one-day drop in three years failed to dent the unanimous support it enjoys from equity analysts amid its climb to successive record highs.
(Bloomberg) — Sembcorp Industries Ltd.’s worst one-day drop in three years failed to dent the unanimous support it enjoys from equity analysts amid its climb to successive record highs.
The stock plunged 9.2% Tuesday following an announcement that the nation’s Energy Market Authority will cap wholesale power prices that had soared as much as 3,000% this year. Fellow power provider Keppel Corp. slid 5.2% on the news, though both were on course to recoup some of their losses Wednesday.
Citigroup Inc. and CGS-CIMB Securities Singapore Pte. were among firms that quickly moved to say Sembcorp’s slide was overdone and that the cap will likely have minimal impact on its earnings as rates eventually settle down. The stock — which has ten buy ratings and no holds or sells — is up about 60% this year, making it the top gainer on the benchmark Straits Times Index.
The utilities and engineering firm has been diversifying into renewable energy, and is considering disposing of some assets, according to an exchange filing in March. With its strong climb over the past few years pushing its market value to more than $7 billion, it is also seen as a potential candidate to join MSCI Inc.’s standard indexes later this year.
“Now that the share price has recovered to an all-time high and it is the prime proxy for power and renewables in Singapore, it make sense for its inclusion” in MSCI’s main gauges, said DBS Bank Ltd. analyst Pei Hwa Ho. “The share price will likely stay strong as these catalysts crystallize going into the third quarter.”
The company is due to release its renewable targets by September and expects to meet its goal for installed capacity of 10 gigawatts to 10 by 2025, it said in its annual report. Sembcorp wasn’t immediately available for comment for this story.
–With assistance from Ann Koh.
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