Sembcorp Marine

Sembcorp Marine: (S$3.10) Clinched its first contract of 2015
Sembcorp Marine (SMM) finally received its first new order after more than a five-month drought with a relatively small contract worth $56m from Teekay Offshore, to convert a shuttle tanker into a floating storage and offloading vessel.

The vessel is expected to arrive at SMM's Jurong Shipyard in Jun 15 and will be worked on for 11 months, before being deployed for the Gina Krog Field in Norwegian's North Sea.

We note that the new project is termed by management to be "important" and will be fast tracked, which raises questions on whether SMM's yard may be running low on utilization as order book wanes.

In Nov '14, management was surprisingly optimistic on its order outlook, citing that enquiries were strong, especially for production assets, and noted its enlarged Tuas yard would allow it to capture those orders.

As at 4Q14, SMM had an order book of $11.4b, its lowest since 2Q12 and we do not rule out that the shipbuilding industry may see vessel deliveries pushed back.

Maybank-KE believes the contract win unlikely to have material impact on stock price and maintains their Sell rating (TP of $2.65), on weak order momentum and the overhang on Brazil corruption probe.