Sembcorp Marine: Announced that it has secured $130m contract to convert a Very Large Crude Carrier (VLCC) tanker, to a FPSO vessel. The FPSO will be delivered to OSX Leasing in Brazil. Conversion project is not expected to have any material impact on NTA and EPS of grp for FY11.
We note that contract brings YTD order wins at $2.8b, with an approximate orderbook of $5.6b vs KepCorp’s $9.1b. Deutsche maintains Buy on counter with $6.20 TP. House believe that they believe grp is a well managed global leader in its fields and stock’s P/B movements during the last global crisis (vis-à-vis oil price changes) can be used as a guide for reentry.
At current oil price of US$75-80/bbl, SMM trades at about 2.3x P/B, respectively, during the last crisis vs current P/B of 1 2.1x suggesting that counter may be trading roughly in line with its last crisis levels.
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