SembMarine

SembMarine: 1Q11 results missed consensus, largely due to revenue recognition issues.
Net profit came in at $151m, flat yoy, -37% yoy, vs consensus estimates of $171m.
The shortfall was from revenue, which came in at $829m, -39% yoy, -16% yoy...
ben_oh: This was due to i) many of the jack-ups that were secured at end-2010 still being in the planning stages hence having very little recognition in 1Q11, and ii) 1Q10's number being inflated by more turnkey semisub projects and resumption of revenue recognition of Petrorig 3 that was previously deferred...

1Q11 operating margins at 20% were significantly better than the 12% recorded in 1Q10, but in line with the annual average margin achieved in FY10. This was driven by higher operational efficiency and productivity gains through execution of repeat rig orders...

Net order book stands at $5.2b with completion and deliveries stretching till 1Q14. YTD, the group has secured $1.5b in new contracts and mgt appears optimistic on prospects, on the back of healthy industry fundamentals, replacement opportunities with the rapidly ageing rig fleet, and focus on high-spec units and industry safety. In addition, SMM has 8 rig construction options outstanding, collectively worth a further ~$2.5b. About 20% of these options will expire in early 2012...

A number of houses raise EPS estimates, on higher margin assumptions; also lift target prices. Credit Suisse (TP $6.60 from $6.30), JPM ($6.70 from $6.40), Goldman (TP $5.50 from $5.40), reiterate Buy/ Outperform ratings.