In March 2020, I had covered Sembcorp Marine (SMM) and lamented that given the poor O&M Industry outlook, it is likely interested bidders will pay for the company at 0.7 times its book value.
UOB KayHian (UOBKH) has recently released its brokerage valuation of SMM; valuing the company to be worth at 0.7 times its net tangible value at its brokerage estimated 17.8 cents per share and issued a sell call. This is one of the probable contributing factor to SMM share price fall over the past 2 days.
I do agree with the analyst in his projection of how much losses SMM will be incurring through to FY22. However, I realize the analyst had made mistakes in his calculation and has opened a possible investment opportunity.
UOB KayHian's Calculation Mistakes
In the analyst report, SMM's estimated 2021 tangible book value is at 17.8 cents after factoring in a loss per share of 2.1 cents and 1.1 cents in each of the FY leading to it....