Thursday, January 20, 2011

SembCorp Marine

SembCorp Marine: Announced that it has secured a turnkey contract to build a jack-up rig with Atwood Oceanics, as part of the three options granted to Atwood in Oct10. The newbuild is priced at around US$182m with delivery scheduled for end-Jun13. The new Pacific Class 400 rig will have similar specifications to the other two rigs ordered earlier, and are the latest generations of high spec jack-up drilling rigs with greater capacities and capabilities than current units….

We note that order wins brings total number of orders secured by grp this yr to an approximate S$448m, and grp has a current orderbook of approximately $5b. Analysts are tipping for grp to clinch approximately $4.5b worth of orders for 2011 (excluding petrobas)….

At current levels, grp trades at 14.4xE FY11 PE vs its historical average of 21.7x, suggesting that valuations are still compelling. Kim Eng remains positive on stock in view of the strong likelihood of even more new orders and is currently reviewing our target price (Current TP $5.40)….

Technically, multi-year high of $5.47 hit 3rd Jan will act as resistance.

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