Friday, February 18, 2011


SembMarine: Citi maintains Buy with $6.20 TP, staying above consensus. Note that SembMar has underperformed Kepcorp YTD on the back of slower orderbook momentum, as well as concerns over its premium valuations….

However, believe that consensus is too cautious on its fundamental outlook currently trades close to mid-cycle level valuations and could rerate higher once orderbook momentum returns. A strong re-rating to valuations will occur when SMM penetrates the drillship market and narrows the product gap with the larger Korean yards.

Daiwa note that 4Q10 results on 23 Feb and look forward to seeing what
the 'normal' operating margin is. Forecast SembMar to announce a Net Profit of $136.6m and $1.1b of revenue. Maintain OutPerform with $5.60 TP, while key share price catalyst will be the announcement of contract awards…..

Expect some additional awards for high-specification jack-ups in 2011, but not at the pace they have been between Sept10 and now. Do not expect any sizable volume of semi-submersible orders until late 2011.

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