Sembcorp Marine shares have risen for two days in a row after the company announced on Tuesday evening that it had agreed to sell its 30 per cent stake in Cosco Shipyard Group to China Ocean Shipping (Group) Company.
The sale of the stake for 1.06 billion yuan (S$220.68 million) will result in a gain of about $48.32 million for Sembcorp Marine.
Yesterday the shares rose two cents to $1.37. Over the past two days, the shares have risen 3.8 per cent, or five cents.
SembMarine had bought the 30 per cent stake in 2004. Cosco Shipyard, a ship repair, conversion and shipbuilding group in China owns six major shipyards in key coastal cities stretching from Dalian in the north, Nantong, Shanghai, Qidong and Zhoushan in the centre, to Guangzhou in the south.
SembMarine will still have an indirect stake in Cosco Shipyard as it owns 4.98 per cent of Cosco Corporation (Singapore), which is listed on the Singapore Exchange (SGX). Cosco Corporation (Singapore) has a 51 per cent stake in Cosco Shipyard.
On Wednesday, the SGX said that SembMarine does not need to seek the approval of shareholders for this disposal.
OCBC Investment Research noted in a report on Wednesday that "this disposal was undertaken as China Shipyard is no longer a strategic investment nor a core asset of Sembcorp Marine".
Looking ahead, OCBC said, this means that the poor performance of the shipyard will not be a drag on SembMarine's results.