Sembcorp Marine (SMM) has bagged a US$1b contract to build the world’s largest semi-submersible crane vessel for Heerema Offshore Services. This follows an earlier LOI signed in Mar this year.
The vessel is designed for the installation and decommissioning of major offshore facilities world-wide and is expected to be delivered in 4Q18.
This is the second contract win for SMM this year and brings its order tally for the year to $1.4b, or about half of Maybank-KE's full year estimate of S$2.7b (2014: $4.2b).
The research house further notes that despite the large price tag associated with the contract, margins are likely to be thin, possibly lower than the typical ~10% margin commanded by the group due to the two heavy-lift cranes and high-end equipment that SMM needs to supply.
As the contract has already been factored into the forecasts and stock price, the house maintains its Sell rating on the counter with TP of $2.45. The stock is nudged up 0.7% to $2.53 in morning trades.
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