With the benefit of hindsight, I could have sold off my shares of Sembcorp Marine at more than $0.20 to get back my capital. However, the amount that I could get back is around $2k+, which is barely enough to buy a share of Alphabet Inc. to own a stake of Google.
Now I only have 4 choices: To sell my Sembcorp marine shares at $0.14 or below, to do nothing, to subscribe partial entitlement of the rights, or to subscribe full entitlement of the rights.
Selling away the Sembcorp marine shares will allow me to take back around $1k+ of capital, which is good enough kopi money for me to spend but insignificant to make decent investments. If I wanted to take back the capital, I would have sold long ago.
To do nothing will subject my stakes to massive dilution due to the huge rights ratio of 3 rights shares on the basis of 2 rights shares owned.
To subscribe for partial entitlement of the rights is like a half fu*k decision. I always believe in making digital binary decision, which is all or nothing when it comes to gambling, betting or trading.
To subscribe for full entitlement of the rights may not be the best choice but it is the only realistic and suitable option for me due to my belief in the prospects of renewable energy and increase of oil prices in the long term. Total capital injection for me will be around $1.5k and Sembcorp Marine will merely constitute around 1% of my $260k portfolio after the event.
2. Renewable Energy
The global Renewable Energy Market was estimated to be worth USD 1089 million in 2019 and is expected to hit USD 1911 million by 2026, growing at a compounded annual growth rate of 8.3% according to FNF Research. US Department of Energy has also estimated wind energy to contribute at least 20% of the total energy supply in the US.
Sembcorp Marine has ventured into the offshore wind farm segment since 2015 and has started to establish a track record in the design, engineering, construction and installation of offshore platforms and jackets for the offshore wind products and solutions.
Sembcorp Marine has recently won a contract to supply jointly with GE Renewal Energy to supply an electrical transmission system for Sofia Offshore Wind Farm.
Renewable energy will be a long term bet for Sembcorp Marine to be profitable again. Perhaps 5 to 10 years horizon. Do or break kind of thing, Sembcorp Marine may cease to exist and fold up in future just like the likes of Hyflux, but if they do succeed, the rewards for patience will be immensely fruitful.
I am happy to continue in this roller coaster journey and look forward to the materialisation of Sembcorp Marine's merger with Keppel Offshore & Marine after the rights issue beef up the financials of Sembcorp Marine.
3. Risk and Return
When punters head to Singapore Pools to place their bets on Toto quickpick or 4D, they are prepared to lose all their money in return for a small chance of striking the jackpot. This action is based on belief and faith, rather than probability and statistics.
In this situation, it is either we cut our losses completely on Sembcorp Marine or continue to punt on the belief of overturning its fortune, though the probability is not high.
I did not really invest in Sembcorp Marine in the first place, as my shares were churned from Sembcorp Industries demerger. I invested in Sembcorp Industries based on my particularly liking for utilities and essential waste management business.
If you are a shareholder of Sembcorp Marine, recall why you bought their shares in the first place. Did you really invest based on belief in its business, or merely punting for the sake of quick returns like gambling in the casino?
As we all know, high risks generate high returns. Buying cryptocurrency is akin to participating in this rights issue of Sembcorp Marine. Their difference is that the value of Cryptocurrency is not based on any underlying business while Sembcorp Marie's fundamentals are consistent loss making. All our investments in cryptocurrency or Sembcorp Marine could possibly become zero, but as long as we risk only what we can afford to lose, we will not lose all our fortune overnight.
4. Small stakes
As I only own a small stake of Sembcorp Marine, what I will be risking by participating in this rights issue is insignificant compared to my net worth. My risk is less than 0.2% of my fortune. Even if Sembcorp Marine were to go bust down the road, I would just need to write off at most $3k from my net worth.
It is important to manage our own risks in any investment. In my investment portfolio heavy with property related Reits, keeping a small slice of Sembcorp Marine dealing with energy business would help to diversify the portfolio slightly.
5. Temasek or Ah-Gong backed
This entire proposal was planned and backed by Temasek. As a government- linked fund manager, they are getting funds from the Ministry of Finance to invest and generate sustainable long-term returns.
In this project, Temasek will increase their stakes in Sembcorp Marine from 43% to 67%. We do not know exactly why they want to do that. Although not all of their past investments were successful, it would be silly to bet against them.
Even if we do not subscribe to our entitlement of Sembcorp Marine rights, someone will be there to underwrite and take up our forgone stakes. And this someone is none other than Temasek.
Die with Ah-Gong together or die alone? I prefer to die with Ah-Gong, just like how I held my faith in Ah-Gong backed Reits of Mapletreee, Capitaland and Ascendas.
In a nutshell, I will go for the subscription of Sembcorp Marine rights and should own a small stake of 30,000 shares post-rights by the end of 3Q 2021. What I have shared is purely based on my own opinion only and is by no means, any recommendation. Do your own due diligence when managing your own money.
Thanks for reading. Stay safe and remain strong as always.
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