SembMar: Citi maintains buy with $5.90 TP following latest drillship orderwin by Co. Note that this is the first drillship contract ever awarded to a SG yard and based on the yard’s own proprietary design. With SMM's maiden newbuild drillship contract from, believe there is increasing likelihood that more orders from the NOC will follow.
This also positions SMM very well to penetrate beyond its earlier target of 6-7 drillships from Petrobras since EAS – a local yard – is behind schedule in delivery and SMM may potentially take over a portion of its 7 drillship contract.
In house view, acceptance of this design represents a breakaway from the Korean shipbuilders in the drillship segment, particularly from Samsung Heavy whose design has dominated market share over the past cycle. Acceptance of this rig will also improve SMM’s marketability to international drillers and widen its addressable mkt.
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