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4 Stocks This Week

4 Stocks This Week (Open Electricity Market) [11 May 2018] – Keppel Corp; Hyflux; SembCorp Industries; StarHub

Open Electricity Market is scheduled to roll out to consumers islandwide in 2H2018. Here are 4 SGX-listed stocks competing for 1.4 million residential accounts.

 

Across the causeway this week, power has changed hands after 61 years from the Barisan Nasional to the opposition coalition led by Mahathir Mohamad.

In Singapore, there is also a power struggle of a different kind afoot : Electricity.

The Energy Market Authority (EMA), which regulates the energy market in Singapore, has been progressively opening the retail electricity market to competition. 1 April 2018 marks a major milestone in this endeavour, when it soft-launched the Open Electricity Market (OEM) in Jurong.

Previously, all residential units in Singapore bought their electricity from SP Group. With the launch of OEM in Jurong, 108,000 residential and 9,500 business accounts will be able to choose from 14 electricity retailers, which offer different plans to suit different power usage patterns.

Based on the number of retailers that have sprung up, you can tell that the electricity market that was once monopolised by SP Group is a pretty lucrative one. In FY15/16, SP Group recorded revenues of $4.0 billion and had assets of $16.7 billion.

Furthermore, OEM is scheduled to roll out islandwide in the second half of 2018, which will give the remaining 1.3 million (mostly residential) accounts choices on which retailer to buy electricity from.

This week, we will look at four listed-companies who have subsidiaries or partners who are among the 14 retailers who have their sights on grabbing market share among the electricity-hungry residential population in Singapore.

Keppel Corporation Limited (SGX: BN4)

Keppel Corporation Limited, is a huge conglomerate that has businesses in offshore and marine, property, and infrastructure segments. Keppel is headquartered in Singapore, with operations spanning Singapore, China, Brazil, other parts of Asia, and around the world.

Keppel is known internationally for their construction and repair of offshore rigs, barges, ships, and deepwater engineering works. It has other divisions that deal in property investment, fund management, golf and hotel ownership, and development of residential properties.

On 19 April 2018, Keppel’s CEO Chin Hua Loh announced that Keppel is looking to capitalise on the improving market conditions to make fresh bids for land sites. Keppel currently has a land bank of about 1,700 units in Singapore, including those from the redevelopment of Keppel Towers and Nassim Woods.

Keppel’s Infrastructure division owns Keppel Electric, which is already an established electricity retailer for more than 3,000 corporate clients. As part of the OEM, it has started to sell to households.

Keppel’s last done price this week was $8.26.

Hyflux Ltd (SGX: 600)

Hyflux Ltd is a global provider of fully-integrated water, power and environmental solutions to municipalities, governments, and industrial customers. The company has considerable expertise in seawater desalination, raw water purification, wastewater cleaning, as well as water recycling and reclamation. In addition, the builds and operates its own power plants and waste-to-energy plants.

Hyflux is also in the local electricity retail market through its subsidiary Hyflux Energy. Established in 2011, Hyflux Energy has been selling electricity to businesses and has expanded its business to residential units under the OEM.

Hyflux’s stock closed this week at $0.215.

Sembcorp Industries Ltd (SGX: U96)

Sembcorp Industries Ltd is another homegrown industrial conglomerate. The company’s many business units engages in the utilities, marine, and urban development businesses in Singapore, China, India, rest of Asia, the Middle East, Africa, Europe, Brazil, the United States, and internationally.

In particular, Sembcorp’s Utilities segment develops, owns and operates energy facilities and has power generation capabilities in access of 11,000 megawatts of gross power capacity. Moving up the value chain, Sembcorp has its subsidiary Sembcorp Power, which has been retailing electricity to contestable corporate customers, and will now be serving residential accounts as part of the OEM.

Sembcorp Industries closed this week at $3.10.

StarHub Ltd (SGX: CC3)

StarHub is an integrated info-communications company based in Singapore. It offers a full range of information, communications and entertainment services for both consumer and corporate markets. These includes operating a mobile network, multi-channel pay TV services, as well as residential broadband services.

On 20 April 2018, StarHub announced the appointment of their new CEO Peter Kaliaropoulo, effective on 9 July 2018.

StarHub is not directly involved in the electricity retail business, but instead has partnered the Sunseap Group to encourage and facilitate Singapore households to use 100% solar energy. Under this joint operation, StarHub will drive adoption of green energy by offering attractive bundles of their mobile, pay TV, broadband with Sunseap’s solar energy packages.

StarHub and Sunseap will also be working together in areas of customer service, billing and sales, as well as exploring opportunities in smart energy and Internet of Things.

StarHub’s last done price this week was $2.18.

4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.


 
 

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