Seatrium shares tumble following news of removal from MSCI index
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MSCI also removed City Developments Limited, Jardine Cycle & Carriage and more as Singapore components of its index.
PHOTO: SEATRIUM
SINGAPORE - Seatrium’s strategy to raise the investment profile of the company via a share consolidation received a blow on May 15 when the stock fell sharply following its removal from the closely watched MSCI index.
Shares of the offshore and marine company were down 21 cents, or 11.7 per cent, at $1.59 on May 15. Volume was heavy with 74.5 million shares changing hands.
MSCI also removed City Developments Limited (CDL), Jardine Cycle & Carriage, Mapletree Logistics Trust (MLT) and Mapletree Pan Asia Commercial Trust (Mpact) as Singapore components of its index. All fell for the day – CDL by 2.2 per cent to $5.80, Jardine C&C by 4.3 per cent to $26.81, MLT by 3.7 per cent to $1.31 and Mpact by 1.6 per cent to $1.22.
The changes, which are part of the regular quarterly review of the MSCI Global Standard Indexes, take effect at the close of trading on May 31. It means that only 16 Singapore-listed stocks will remain in the MSCI Singapore section.
MSCI’s move comes after the much publicised 20-for-one share consolidation by Seatrium, ostensibly to reduce the penny stock punting element of the stock and bring it onto the radar of institutional investors.
Seatrium chief executive Chris Ong had said the share consolidation would stamp out short-sellers and make the stock “a lot more attractive” to institutional investors who can focus on the stock’s “growth forward rather than the burden of what’s behind”.
Institutional investors have been attracted to the stock, said Mr Ong, because “there are not many businesses that can claim to play at the scale and outreach that Seatrium has”.
On April 29, the group announced a $100 million share buyback programme where it would buy back up to a maximum of 2 per cent of total issued shares – news that boosted the counter by as much as 5.6 per cent on the same day.
Known as Sembcorp Marine prior to its 2022 merger with Keppel O&M, Seatrium has struggled with legacy issues such as impairments and fines – chief of which was the involvement of Sembcorp Marine executives in a Brazil corruption probe.
The company booked an $866.6 million writedown of property, plant and equipment in its financial year 2023 results as a result of its strategic review, in addition to a $277.7 million writedown of right-of-use assets during the second half.
Seatrium’s latest public filing was made on May 13 when the company announced it would be releasing its business update for the first quarter on May 28, before trading begins.
