Sembcorp Marine

Sembcorp Marine: Grp has signed a Letter of Intent with repeat customer Prosafe for the construction of a semi-submersible accommodation rig. The rig, which is of similar design as the Safe Boreas presently under construction in Jurong Shipyard will be built to comply with Norwegian regulations. Recall that in Dec2011, SMM, secured a US$291.6m contract to build an accommodation Semi-Submersible Rig with Ooptions for another 2 from Prosafe. (Today’s LOI is most likely the exercising of 1 of the 2 options) In addition to the above, SMM has subject to board approval, granted two more options for further new builds, meaning that Prosafe now in total has options for three new builds at JSPL. OCBC note that assuming the price of this latest rig is the same, it would also boost SMM’s new order wins YTD to about $9.47b, close to house full-year estimate. House maintain BUY with $6.09 fair value estimate.