SMM

SMM: as expected, announces US$4.032b drillship contracts from Sete Brasil, a day after Keppel’s own Sete Brasil order announcements. SMM’s order is for 5 drillships based on its proprietary Jurong Espadon drillship design. Recall in Feb ’12, SMM already received one drillship order from Sete Brasil priced at US$792.5m. All 6 drillships will be high specification, and ultra-deepwater, capable of operating at 10000 ft water depth and drilling to depths of 40000 ft with accommodation facilities for a crew of 180 personnel. SMM’s drillships are scheduled for deliveries btwn 2Q15 to 2Q19, similar to Keppel. The orders bring SMM’s ytd order wings to $8.2b, exceeding its $3.7b order wins for the whole of last year, and above Keppel’s ytd order wins of $7.2b. With the extended orderbook visibility, both rig builders continue to be Street favroties. SMM has 22 Buy and 4 Hold ratings with TP btwn $4.40 - $7.00. KEP has 23 Buy, 2 Hold and 1 Sell rating with recent TP btwn $12.05 – 14.80.