Thursday, April 2, 2015

Sembcorp Marine

Sembcorp Marine: Nomura reiterated Buy on Sembcorp Marine (SMM) (TP: $4.07) due to its higher exposure to potential deepwater rig orders, while its Reduce on Keppel Corp (TP: $7.95) is due to its higher exposure to jackup rig orders.

The active deepwater rig attritions continue to hint at the possibility of a structural rigbuilding upcycle from 4Q15F, if the oil price is to recover h/h as expected, while the jackup rigs’ oversupply situation should worsen.

Assuming SMM’s LOI for a newbuild semisubmersible crane vessel from Heerema Offshore Services recently awarded is a full turnkey project, Nomura estimates the contract value at US$1.1b-US$1.3b, equal to 40-47% of its $3.8b order expectation for SMM in 2015F.

Comparatively, Keppel Corp has secured $330m in 1Q15, which is equal to 8% of its $4.3b order win expectation for this year.

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