Sembcorp Industries now trade ex-entitlement

Sembcorp Industries price “collapsed” by c.40% today (as of this writing) as the shares went ex-entitlement. Shareholders of Sembcorp Industries shares as of 8 September will be entitled to receive 4.911 shares of Sembcorp Marine for 1 Sembcorp Marine shares that they own. This “entitlement” will no longer be valid as of 9 September, resulting in the correction of Sembcorp Industries price.

Ex-entitlement price

Sembcorp Industries was last-trading at S$1.91 when it was still “cum-entitlement”. This was in the ballpark figure of what I calculated as the fair value of the share (S$1.88) in this article: Sembcorp Industries. What might be its fair value?

The share price of Sembcorp Marine is currently trading at S$0.175 (as of this writing). Assuming that this price holds come Friday (where Sembcorp Industries’ shareholders will receive their entitled 1 Sembcorp Industries: 4.911 Sembcorp Marine shares), their Sembcorp Marine stake will be worth (S$0.175*4.911 = S$0.86) for 1 Sembcorp Industries shares.