Sembcorp Marine (S$2.18) New FSO contract provides scant breathing space
Sembcorp Marine (SMM) clinched a contract to design and build a new floating, storage and offloading (FSO) vessel for the Japanese MODEC, scheduled for delivery in 1Q18 and will be deployed at the Maersk Oil’s Culzean field.
This marks the rig and vessel builder’s first FSO newbuilding secured on a full turnkey project basis, including engineering, procurement, construction and commissioning. Its previous FSO contracts were all conversion jobs.
Market watchers estimate that the deal may worth between US$150m and US$180m, thereby elevating SMM’s order book to about S$11.8b.
The contract win is a timely and a much needed one for the group, and helps lift some pressure off negative market sentiment, weighed by the persistent downturn in oil prices, uncertainty from Sete Brasil contracts, which account for 50% of its order book, and latest Marco Polo’s US$$214m jackup rig contract cancellation.
Nevertheless, the street is still downbeat on SMM as there are 3 Buy, 7 Hold and 13 Sell ratings with a consensus TP of $2.19 on the counter.
Sembcorp Marine is currently trading at 12x FY15 P/E.
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