Tuesday, December 20, 2011

SembCorp Marine

SembCorp Marine: Announced it has won a US$140m contract from Equinox Offshore to convert a ropax vessel to an Accommodation and Repair Vessel. Vessel is expected to arrive in the shipyard in Jan12 for the conversion and modification works, which is scheduled for completion in 4Q12. We note that latest wins brings Ytd Order wins of S$3.9b, while orderbook now stands at approx.S$5.75b.

On another note, grp has marked an important milestone in its growth and expansion strategy with the ground breaking of Estaleiro Jurong Aracruz, the Group’s first overseas Integrated New Yard Facility in Brazil. The construction and develop incorporated new Brazilian shipyard is in-line with grp’s strategy to further strengthen its foothold in Brazil.

DMG maintains Buy, and increase TP to $5.25 from $5.16. Note that more orders; 4Q11 order win more than S$1.1b. Add that grp has strong revenue visibility for FY12 as 79% of revenue forecast is backed by existing order book and recurring ship repair work.

Nomura similarly reiterate Buy, TP $4.50, Ordering activity still going strong. Believe the current order along with the US$292mn contract from Prosafe last wk is indicative of the strength in demand for deepwater exploration, production and accommodation units.

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