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SembCorp Marine- The new Frontier.

Wow, so much constructive info and positive vibes.....SMM is finally shouting out " We are the world No. 1 in marine & offshore" .

And wishing us good fortune in 2021. Is this hint loud enough?

naoshingo      ( Date: 16-Jan-2021 22:41) Posted: SM just updated their website with new banner. Wishing us Good Fortune    https://www.sembmarine.com/

 

so, grove counter cheong again?

Godwinlow      ( Date: 16-Jan-2021 22:56) Posted: I also waiting until haiz. The US and China side getting more worrying. Plus virus mutations is getting more and more different kinds. Existing vaccine I don' t think can work naoshingo      ( Date: 16-Jan-2021 22:43) Posted: Ya..I am waiting...haiz...

 

I also waiting until haiz. The US and China side getting more worrying. Plus virus mutations is getting more and more different kinds. Existing vaccine I don' t think can work

naoshingo      ( Date: 16-Jan-2021 22:43) Posted: Ya..I am waiting...haiz.... Godwinlow      ( Date: 16-Jan-2021 19:02) Posted: Merger can change name

 

Ya..I am waiting...haiz....

Godwinlow      ( Date: 16-Jan-2021 19:02) Posted: Merger can change name. naoshingo      ( Date: 16-Jan-2021 12:52) Posted: I think both SCI and SM have bottomed....given their transformation effort in 2020... Let' s hope for a better 2021... But again,,,I think SM shouldn' t use the name SembCorp anymore....it is so confusing....should change name lah.,.

 

SM just updated their website with new banner.
Wishing us Good Fortune   

https://www.sembmarine.com/

 

I also dont know le. No one can guarantee one. US side so messy. Virus cases non stop. Even China also need to lock down cities. More and more different kind of mutations. Even don' t know existing vaccines can be help or not. U see this Friday oil prices. So fast retreat back. So many unknowns. Anyone can advice? 

spore1      ( Date: 16-Jan-2021 20:10) Posted: 20 cents TP is achievable! Godwinlow      ( Date: 16-Jan-2021 19:02) Posted: Merger can change name

 

20 cents TP is achievable!

Godwinlow      ( Date: 16-Jan-2021 19:02) Posted: Merger can change name. naoshingo      ( Date: 16-Jan-2021 12:52) Posted: I think both SCI and SM have bottomed....given their transformation effort in 2020... Let' s hope for a better 2021... But again,,,I think SM shouldn' t use the name SembCorp anymore....it is so confusing....should change name lah.,.

 

Merger can change name.

naoshingo      ( Date: 16-Jan-2021 12:52) Posted: I think both SCI and SM have bottomed....given their transformation effort in 2020... Let' s hope for a better 2021... But again,,,I think SM shouldn' t use the name SembCorp anymore....it is so confusing....should change name lah.,.. bystander1965      ( Date: 16-Jan-2021 12:36) Posted: 🤣 🤣 🤣 Don't get emotional. It is just.some investment. SMM cost me quite a bit and I am still friend it. 😄

 

I think both SCI and SM have bottomed....given their transformation effort in 2020...
Let' s hope for a better 2021...

But again,,,I think SM shouldn' t use the name SembCorp anymore....it is so confusing....should change name lah.,..

bystander1965      ( Date: 16-Jan-2021 12:36) Posted: 🤣 🤣 🤣 Don't get emotional. It is just.some investment. SMM cost me quite a bit and I am still friend it. 😄 better      ( Date: 16-Jan-2021 11:29) Posted: SCI' s  Chief Financial Officer decided to run road first because he probably realised that it is getting almost impossible to continue to put lipstick on a pig to make it looks good, after the demerger.

 

🤣 🤣 🤣 Don't get emotional. It is just.some investment. SMM cost me quite a bit and I am still friend it. 😄

better      ( Date: 16-Jan-2021 11:29) Posted: SCI' s  Chief Financial Officer decided to run road first because he probably realised that it is getting almost impossible to continue to put lipstick on a pig to make it looks good, after the demerger.

 

Ok. I know it was not explicitly mentioned and couldn't find it and some analyst speculated.it was hidden in one the numbers. So worst case we can throw it into the debt side. But u still cannot take the pre-merger equity and assumed it is the same after the demerger. Granted it could be worse but from 2015 smm was increasing its debt every year and so did sci from there on. This points to the fact that most the debt were probably from SMM.

better      ( Date: 16-Jan-2021 12:04) Posted: Wrong again.Just did some investigation to see how SCI account for it. The $1.5 billion loan did not appear anywhere in SCI' s financial statements previously (Financial alchemy), just a casual mention in the footnote. Effectively, the arrangmenet is SMM take the loan from the bank with SCI as a guarantor. The term of the rights issue is such that SCI takes over the 3.55% $1.5 billion loan in exchange for the rights shares. That' s why shortly after the demerger, SCI needs to max out their credit facility and topup cash to pay off the loan (announc ed on the 27th Oct 2020). Remember, this $1.5 billion was not in SCi' s book previously.. So effectively, the transaction is like a mega cashflow event for SCI, taking more debt and deplete cash on hand. Again, this might be confusing for those with no accounting background.  Essentiually, SCI' s balance sheet will look very very stretched when they report their full year result in Feb. That' s why the CFO run road first. bystander1965      ( Date: 16-Jan-2021 11:27) Posted: But that 1.5B debt was taken in 2019. So by right Jun2020 it should be somewhere in the debt already. If we take it out again, not sure if it' s double counted. (so instead of 1.5B, it has become 3.0B

 

Anyways, I don' t agree with your double subtraction of 1.5B and 1.1B that amount to 2.6B of write off in equity from SCI...this is double accounting....
Lol...I don' t recall SM has a market cap of 2.6B in the first place....

By the way, do you diversify your portfolio or you just put everything in one basket? 


better             ( Date: 16-Jan-2021 10:15) Posted:
 

better      ( Date: 16-Jan-2021 12:26) Posted: Based on the SCI demerger document page 16, I quote below...it shalll not go beyonnd $1.5B...no more no less....no additional funding from SCI... SCI' s rights share entitlement based on their 61% shareholding previously is $1.281 billion worth (2.1 x 0.61)/- Meaning if everyone subsribe to their rights share, SCI can only buy up to $1.281 bil worth of rights shares. That paragraph is basically saying that if some minority sharehodlers did not subsribe to their rights shares, they would use the balance of 219 million (1.5 - 1.281) to buy the unsubsribed rights share. If there are still more unsubsribed rights shares, Temasek will mop them up.

 

Based on the SCI demerger document page 16, I quote below...it shalll not go beyonnd $1.5B...no more no less....no additional funding from SCI...


SCI' s rights share entitlement based on their 61% shareholding previously is $1.281 billion worth (2.1 x 0.61)/-

Meaning if everyone subsribe to their rights share, SCI can only buy up to $1.281 bil worth of rights shares.

That paragraph is basically saying that if some minority sharehodlers did not subsribe to their rights shares, they would use the balance of 219 million (1.5 - 1.281) to buy the unsubsribed rights share.

If there are still more unsubsribed rights shares, Temasek will mop them up. 

 

Bro Better, now you said " Effectively, the arrangmenet is SMM take the loan from the bank with SCI as a guarantor. The term of the rights issue is such that SCI takes over the 3.55% $1.5 billion loan in exchange for the rights shares." 3.5% of the loan and not the full amount?


Based on the SCI demerger document page 16, I quote below...it shalll not go beyonnd $1.5B...no more no less....no additional funding from SCI...

Pursuant to the terms of the Undertaking Agreement, SCI and SCM have also agreed, inter alia, that: (A) the aggregate price payable by SCI (the &ldquo SCM Rights Subscription Amount&rdquo ) for the SCI Pro-Rata SCM Rights Shares and any Excess SCM Rights Shares (collectively, the &ldquo Undertaking SCM Rights Shares&rdquo ) shall not at any time exceed S$1.5 billion (representing up to 7,500,000,000 SCM Rights Shares, comprising 6,371,353,820 SCI Pro-Rata SCM Rights Shares and up to 1,128,646,180 Excess SCM Rights Shares) (B) consistent with the use of the proceeds from the Proposed SCM Rights Issue, SCI&rsquo s obligation to pay the SCM Rights Subscription Amount shall be set off against an equivalent amount of the principal amount outstanding and due and owing to SCI by SCM under the Subordinated Credit Facility following the Novation (as defined in paragraph 3.14(i) below). In the event that the aggregate value of the SCM Rights Shares subscribed for by the SCM Shareholders (other than SCI) and investors (if any), based on the SCM Rights Issue Price, exceeds S$0.6 billion, such that the aggregate value of the Undertaking SCM Rights Shares which SCI is required to subscribe for pursuant to the Undertaking Agreement is less than S$1.5 billion, for the purposes of repayment of the outstanding principal of S$1.5 billion under the Subordinated Credit Facility, as set out in paragraph 3.5(i), SCM would utilise either the cash proceeds from the Proposed SCM Rights Issue or its available cash balances to repay any such amounts not set off in the manner described in this paragraph 3.9(B), as further described in paragraph 3.9(C)

better      ( Date: 16-Jan-2021 12:04) Posted: Wrong again.Just did some investigation to see how SCI account for it. The $1.5 billion loan did not appear anywhere in SCI' s financial statements previously (Financial alchemy), just a casual mention in the footnote. Effectively, the arrangmenet is SMM take the loan from the bank with SCI as a guarantor. The term of the rights issue is such that SCI takes over the 3.55% $1.5 billion loan in exchange for the rights shares. That' s why shortly after the demerger, SCI needs to max out their credit facility and topup cash to pay off the loan (announc ed on the 27th Oct 2020). Remember, this $1.5 billion was not in SCi' s book previously.. So effectively, the transaction is like a mega cashflow event for SCI, taking more debt and deplete cash on hand. Again, this might be confusing for those with no accounting background.  Essentiually, SCI' s balance sheet will look very very stretched when they report their full year result in Feb. That' s why the CFO run road first. bystander1965      ( Date: 16-Jan-2021 11:27) Posted: But that 1.5B debt was taken in 2019. So by right Jun2020 it should be somewhere in the debt already. If we take it out again, not sure if it' s double counted. (so instead of 1.5B, it has become 3.0B

 

Wrong again.Just did some investigation to see how SCI account for it.

The $1.5 billion loan did not appear anywhere in SCI' s financial statements previously (Financial alchemy), just a casual mention in the footnote.

Effectively, the arrangmenet is SMM take the loan from the bank with SCI as a guarantor. The term of the rights issue is such that SCI takes over the 3.55% $1.5 billion loan in exchange for the rights shares.

That' s why shortly after the demerger, SCI needs to max out their credit facility and topup cash to pay off the loan (announc ed on the 27th Oct 2020).

Remember, this $1.5 billion was not in SCi' s book previously.. So effectively, the transaction is like a mega cashflow event for SCI, taking more debt and deplete cash on hand.

Again, this might be confusing for those with no accounting background. 

Essentiually, SCI' s balance sheet will look very very stretched when they report their full year result in Feb. That' s why the CFO run road first.

bystander1965      ( Date: 16-Jan-2021 11:27) Posted: But that 1.5B debt was taken in 2019. So by right Jun2020 it should be somewhere in the debt already. If we take it out again, not sure if it' s double counted. (so instead of 1.5B, it has become 3.0B) bystander1965      ( Date: 16-Jan-2021 11:25) Posted: That' s because SCI took on the 1.5B loan (debt) so effectively its equity will decrease by the same amount. What I do not agree is the guessed asset and debt numbers of SCI after the demerger. His original asset and debt numbers for SCI from yahoo for June2020 are also completely different from SCI june2020 financial report.

 

It would be really silly to do investment based on only 1 ratio and use its absolute value as it is. Ratios should always be used as a comparison to its peers, i.e. those in similar industries. A 5 or 0.5 alone does not mean anything at all.

bystander1965      ( Date: 16-Jan-2021 11:52) Posted: Just ignore his calculations lah. This calculation just assumed after the demerger, SCI' s asset and debt decrease by the same amount, and to make the number look bad, just pile all the debt and write-off to reduce the equity. His mind is already set that it' s very bad. So he just finds ways to fulfill his vision. Just go do the calculation yourself, and you will see the more approriate approximations. Not beautiful but not dire like he put it. If SCI does some unlocking of SH values, they can also bring the ratio down, although the ratio as I have shown is not that far off its industry' s range. Lastly, this is only 1 ratio. What about all other ratios, good or bad ones? I am very sure you can find some good ones just to prove the points if you are bullish.   naoshingo      ( Date: 16-Jan-2021 11:33) Posted: Hmm.. Then I am not sure if it is correct to subtract  both 1.5B for the loan and 1.1B for the undervalue of SM. Because if you calculate that way...total lost from demerger from SM is 2.6B. Also I believe SCI now convert it into SM equity....so shouldn' t you also add in the remainder value of SM? better           ( Date: 16-Jan-2021 10:15) Posted:   Simple.  Equity is 6.65 billion before demerger. 6.65 - 1.5 (write off subordinated loan) - 1.1  (their equity stake in SMM) - 0.1 (their write off/loss for H2 2020) = 3.95 billion.

 

Just ignore his calculations lah. This calculation just assumed after the demerger, SCI' s asset and debt decrease by the same amount, and to make the number look bad, just pile all the debt and write-off to reduce the equity. His mind is already set that it' s very bad. So he just finds ways to fulfill his vision.
Just go do the calculation yourself, and you will see the more approriate approximations. Not beautiful but not dire like he put it.
If SCI does some unlocking of SH values, they can also bring the ratio down, although the ratio as I have shown is not that far off its industry' s range.
Lastly, this is only 1 ratio. What about all other ratios, good or bad ones? I am very sure you can find some good ones just to prove the points if you are bullish.
 

naoshingo      ( Date: 16-Jan-2021 11:33) Posted: Hmm.. Then I am not sure if it is correct to subtract  both 1.5B for the loan and 1.1B for the undervalue of SM. Because if you calculate that way...total lost from demerger from SM is 2.6B. Also I believe SCI now convert it into SM equity....so shouldn' t you also add in the remainder value of SM? better           ( Date: 16-Jan-2021 10:15) Posted:   Simple.  Equity is 6.65 billion before demerger. 6.65 - 1.5 (write off subordinated loan) - 1.1  (their equity stake in SMM) - 0.1 (their write off/loss for H2 2020) = 3.95 billion.   better      ( Date: 16-Jan-2021 11:23) Posted: Before demerger, SCI loaned SMM $1.5 billion. This is called the subordinated loan. SCI write off the $1.5billion loan to SMM in exchange for the rights share to distribute to their shareholders together with the mother shares. Effectively, most of the free SMM shares that SCI shareholders received is from the writing off the $1.5billion loan to SMM. Most of the cash that SMM has in their book now, actually comes from SCI.  To give life to SMM, basically Temasek tucked SCI under the bus.

 

Read this para from SM website.
$1.5B of the rights issue by SM is to pay for the  outstanding principal of S$1.5 billion under the Subordinated Credit Facility.

Bro Better, I think you got your accounting wrong....

 

Issue and Listing of Rights Shares

The 10,462,690,870 Rights Shares were allotted and issued  on the Main Board of the SGX-ST  on 11 September 2020 pursuant to the Rights Issue. 

Based on the foregoing, the net proceeds raised by the Company from the Rights Issue are approximately S$2.1 billion. Of the net proceeds, an amount of S$1.5 billion (representing the consideration for 7,500,000,000 Rights Shares subscribed for by SCI pursuant to the SCI Undertaking Agreement) has been allocated and will be utilised to repay (by way of set off) the outstanding principal of S$1.5 billion under the Subordinated Credit Facility in accordance with the stated use and the percentage allocated as disclosed in the  Offer Information Statement. Following the foregoing utilisation, the amount of unutilised net proceeds would be approximately S$0.6 billion. https://www.sembmarine.com/investor-relations/sembcorp-marine-rights-issue

naoshingo      ( Date: 16-Jan-2021 11:33) Posted: Hmm.. Then I am not sure if it is correct to subtract  both 1.5B for the loan and 1.1B for the undervalue of SM. Because if you calculate that way...total lost from demerger from SM is 2.6B. Also I believe SCI now convert it into SM equity....so shouldn' t you also add in the remainder value of SM? better           ( Date: 16-Jan-2021 10:15) Posted:   Simple.  Equity is 6.65 billion before demerger. 6.65 - 1.5 (write off subordinated loan) - 1.1  (their equity stake in SMM) - 0.1 (their write off/loss for H2 2020) = 3.95 billion.   better      ( Date: 16-Jan-2021 11:23) Posted: Before demerger, SCI loaned SMM $1.5 billion. This is called the subordinated loan. SCI write off the $1.5billion loan to SMM in exchange for the rights share to distribute to their shareholders together with the mother shares. Effectively, most of the free SMM shares that SCI shareholders received is from the writing off the $1.5billion loan to SMM. Most of the cash that SMM has in their book now, actually comes from SCI.  To give life to SMM, basically Temasek tucked SCI under the bus.

 

Hmm..
Then I am not sure if it is correct to subtract  both 1.5B for the loan and 1.1B for the undervalue of SM.
Because if you calculate that way...total lost from demerger from SM is 2.6B.

Also I believe SCI now convert it into SM equity....so shouldn' t you also add in the remainder value of SM?

better           ( Date: 16-Jan-2021 10:15) Posted:
 

better      ( Date: 16-Jan-2021 11:23) Posted: Before demerger, SCI loaned SMM $1.5 billion. This is called the subordinated loan. SCI write off the $1.5billion loan to SMM in exchange for the rights share to distribute to their shareholders together with the mother shares. Effectively, most of the free SMM shares that SCI shareholders received is from the writing off the $1.5billion loan to SMM. Most of the cash that SMM has in their book now, actually comes from SCI.  To give life to SMM, basically Temasek tucked SCI under the bus.

 

SCI' s  Chief Financial Officer decided to run road first because he probably realised that it is getting almost impossible to continue to put lipstick on a pig to make it looks good, after the demerger.