Shares of Sembcorp Marine Ltd. rose sharply after index provider MSCI Inc. said the company will be included in indexes March 2.
The Singapore-listed marine and offshore engineering group’s shares rose as much as 9.5% to 13 Singapore cents (9.73 U.S. cents) in morning trading, after MSCI confirmed the company’s inclusion late Monday.
“There are a lot of recent shorts on Sembcorp Marine and there could be buying on the stock following the announcement of the MSCI inclusion,” Brian Freitas, an analyst with Periscope Analytics, said in a note. Sembcorp Marine’s shares have fallen 8.7% year to date.
Sembcorp Marine’s shares have also been pressured in recent sessions, after a majority of its shareholders voted in favor of a potential merger with Keppel Offshore & Marine in a board meeting last week.
In a note last week, Citi analyst Jame Osman said he views the possible deal as positive for both parties, although Keppel O&M’s parent company, Keppel Corp., will likely benefit more.
“Ahead, even as we think [Sembcorp Marine’s] current valuations suggest an optimistic bull case scenario is being priced in, while risk factors appear inadequately discounted, we view that potential index inclusions could support near-term share price performance,” the analyst said.
Citi maintained its sell rating and S$0.10 target price on Sembcorp Marine’s stock, citing its cautious view on the company’s fundamentals.