Once an O&G giant at $6.00, it's quite heartbreaking to see the company become a penny at 0.150.
This drop is most likely due to the proposed rights issue to improve its gearing to explore the merger with Kepple O&M. Regardless of its overall future outlook, the Rights Issue is never pretty for existing holders. Sembcorp Marine just very recently executed an extremely dilutive rights issue prior to its divorce from Sembcorp Ind. Chances are that many "loyal" holders will most likely be unloading given that they have been "duped" into another rights issue yet again. One can only milk the cow so far.
Who's to say Sembcorp Marine could recover in the next 10 years. It is highly possible. But as a trader, one does not trade into uncertainty when there are many other options available.
It is a common fallacy that if the stock was once very high in the past, it can recover to former days glory. Sadly, the fact it had dropped so low is an indication that such recovery is highly unlikely. Trend, market, and macro have changed since then. That's why the price dropped.
However, the opposite is actually more probable. Stocks that have not seen the high and is on the uptrend are more likely to see the highs because it is working towards that future. Think Propnex, Frencken, iFast.
Yet the idea that if a counter was $6.00 in the past and it's $0.150 now can go back to $6.000, is extremely flawed. SIA will never see $12 in the next 7-8 years. Creative can only dream to go back to $26 in this lifetime.
The most probable way anyone could profit hugely from Sembcorp Marine is if it gets privatize at a reasonable premium after the rights issue (Similar to what happen to tiger air). Even then, this is a long shot, and the majority of the holders will still be at a loss.
Sure, Sembcorp Marine will have a small rebound here and there which will trick inexperienced/emotional traders into going long. That sort of return you could catch from such rebound can be easily caught in another uptrend counters with much lesser risk.
Verdict: Low can go lower. Not worth the risk to catch any form of rebound!
This drop is most likely due to the proposed rights issue to improve its gearing to explore the merger with Kepple O&M. Regardless of its overall future outlook, the Rights Issue is never pretty for existing holders. Sembcorp Marine just very recently executed an extremely dilutive rights issue prior to its divorce from Sembcorp Ind. Chances are that many "loyal" holders will most likely be unloading given that they have been "duped" into another rights issue yet again. One can only milk the cow so far.
Who's to say Sembcorp Marine could recover in the next 10 years. It is highly possible. But as a trader, one does not trade into uncertainty when there are many other options available.
It is a common fallacy that if the stock was once very high in the past, it can recover to former days glory. Sadly, the fact it had dropped so low is an indication that such recovery is highly unlikely. Trend, market, and macro have changed since then. That's why the price dropped.
However, the opposite is actually more probable. Stocks that have not seen the high and is on the uptrend are more likely to see the highs because it is working towards that future. Think Propnex, Frencken, iFast.
Yet the idea that if a counter was $6.00 in the past and it's $0.150 now can go back to $6.000, is extremely flawed. SIA will never see $12 in the next 7-8 years. Creative can only dream to go back to $26 in this lifetime.
The most probable way anyone could profit hugely from Sembcorp Marine is if it gets privatize at a reasonable premium after the rights issue (Similar to what happen to tiger air). Even then, this is a long shot, and the majority of the holders will still be at a loss.
Sure, Sembcorp Marine will have a small rebound here and there which will trick inexperienced/emotional traders into going long. That sort of return you could catch from such rebound can be easily caught in another uptrend counters with much lesser risk.
Verdict: Low can go lower. Not worth the risk to catch any form of rebound!