SembCorp Industries Trades Unusually High Volume (SCIL)

Temperatures are high and patience is thing in the market as the Facebook (NASDAQ: FB) IPO battle rages on. While investors focus on the social media sector, SembCorp (SCIL) Industries investors struck a unique trading with a recent announcement of a $337.8 million approval to cater for an industrial park in Vietnam with a 1,200-megawatt capacity power plant. This has marked renewed strength in the volatile stocks of the Singapore-based conglomerate.

Trading Update

SembCorp unusually high trading volume can be partially attributed to the increase of net profits in the first quarter of 2012. This growth was partly aligned with the utility sector’s strong growth (the utility business divisions of SembCorp that delivered 54% of overall profits). The company also reported hihg return on equity: annualized to +15.8% or +9.9 cents per share, an improvement over the previous reporting period. Tang Kin Fei, Group president and CEO of SembCorp Industries, attributed the growth in utilities particularly to the acquisition of wind power assets located in China, which he stated will accelerate the company’s growth in renewable sector. SembCorp continues to rely on multiple business lines for revenue.

SembCorp Lines of Business

The key project to look out for is its Singapore cogeneration plant. The Singapore plant operates in concert with other utility projects in China. All are expected to deliver steady revenue to the company, though utilities is a known cyclical industry due to the seasonality of power use.

The projects in the pipeline have launched completion and deliveries stretching to 2015. This pipeline is one of the longest in SembCorp’s receivables ledger.

Urban Development
The slowing down of the world economy has had, paradoxically, little effect on the company, as SembCorp’s projects are sourced globally. There are few companies equipped to handle large urban development projects in the world today, giving SembCorp a worldwide customer based for counteracting localized recessions and ensuring performance throughout the year.


All investors are looking out for stability and sustainable growth in their corporate investments. The volume of trading of SembCorp indicates investor interest, although short-term traders and institutions also constitute a large block of that activity. Most of the European and American blue-chips face a recessionary environment, but SembCorp stock continues to rise this year above major indices. The global economic outlook is very volatile at the moment, giving companies with a pipeline of business to position themselves among the top gainers in the market.

Be on the lookout for headlines about maintenance and cogeneration of the power plant located in Singapore over the next few months. In the midst of the weakened macro-economic environment, Singapore continues to outperform and the company’s announcements concerning this flagship plant will be material for investors in this stock.

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Published by Donna Fago

I believe in writing content Informing investors with the knowledge they need to invest better today- I have been following the markets for many years and was asked to join the team at recently due to my passion for the markets.

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