Thursday, February 24, 2011


SembMarine: FY10 results. Another record year of net profit at $860m, +23% yoy, soundly beating expectations. This was despite a 20% yoy decline in turnover to $4.56b, due to lower progressive revenue recognition for offshore projects.
Similar to Keppel, SMM reported strong operating margins, with 4Q10 OPM at 30.3% vs 25.4% qoq and 28.8% yoy…

Backed by a cash hoard of $2.9b, SMM is proposing 6cts final div and 25cts special div. Together with the 5cts interim div, full yr payout amounts to 36cts (+140% yoy), translating to a generous 6.9% yield.
Feb ‘11 orderbook stands at a healthy $4.8b, up from $4.7b at end 3Q10, with visibility till 2013. Furthermore, SMM has granted options for 10 additional rigs worth a combined $2.5b if fully exercised, suggesting strong order momentum may continue…

Mgt guides for 2011operating margins to stay at double-digit % pts, expects demand to further improve as order enquiries are rising. Notes fundamentals remain intact so long as oil prices stay >US$80, but acknowledges Middle East tensions could lead to some uncertainty in the near term.
The majority of Street reiterates Buy ratings, with a number of houses raising target prices.
Deutsche $6.90 to $7.
Credit Suisse $6.10 to $6.30.
Goldman $5 to $5.40 (neutral)

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