SMM

SMM: has secured two turnkey contracts with a combined value of US$434m for the construction of two units of jackup rigs from Mexico’s Oro Negro. The high spec and high performance deep drilling offshore jack up rigs will be build based on the PPL Pacific Class 400 design, and are scheduled for delivery at end 4Q13 and end 1Q14. The contract is timely, as this may assuage investor concerns about order flow following the recent accident that occurred at SMM’s Jurong shipyard. SMM stock had fallen 3.1% since end Nov to yday’s close at $4.42. The orders bring SMM’s ytd contracts to $11b, and its total outstanding orderbook to $14b. The stock trades at 15.4x P/E. The street has 15 Buys, 7 Holds and 2 Sells. Consensus TP is $5.29.