Sembcorp Marine: OCBC raises SembMarine’s SOTP-based fair value estimate to $6.17 from $5.70 and maintains a Buy rating on the stock despite lower prices of jack up rig orders as its order outlook is now brighter. Note that should new orders continue to flow, the number of available rig slots at prominent shipyards will decrease, and yards may enjoy greater pricing power as the tide turns in their favor…..
Add that recent analyst briefings of three US drillers reflect greater optimism about the general outlook for the rig market in various parts of the world, though activity in the Gulf of Mexico is expected to remain low….
House says that prices of recent orders secured by Sembcorp Marine are 12% lower than they were in their 2007-2008 peak, though better than the house's expectations.
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