Wednesday, October 19, 2011


SembMarine: Announced that its processing module division has been awarded a contract valued at approximately US$100m, which could potentially increase to more than US$150m, for the module assembly of LNG's liquefied natural gas facility in Curtis Island, Australia, for Australia Pacific. The contract also adds to grp’s diversification into more LNG projects, especially in Aus and the region

Recall that Ezion Holdings has also been awarded a contract to provide full logistic and support service activities for the haulage of equipment and modules for the development of LNG facilities on Curtis Island, and the whole Curtis Island project is estimated to have a budget of around US$40b.

Kim Eng estimate that the margin for project stands at around 10%, but earnings contribution to SMM will be relatively small vs its larger earnings base. However, with this initial contract, believe that there is more potential for grp to secure more such work, as is with Ezion as well. For SMM, maintain Buy recommendation to TP of $4.95 and Ezion is also a Buy with TP of $0.99.

Similarly DMG maintain Buy, with TP $5.46, noting that contract win is positive and lifts YTD order wins to $3b and outstanding order book to $6b, while Nomura also maintain Buy, TP $4.50. Believe that new order wins at SMM are still likely as operators continue to experience strong chartering demand.

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