SMM

SMM: 1Q13 results slightly below. Revenue was up 11% yoy to $1.05b, but was below expectations due to fewer projects reaching revenue recognition milestone. Net profit rose 5% yoy to $119m, but was also slightly below expectations at 20% of Street of forecasts, dragged by disappointing associate income due to poor performance of Cosco. Operating margins however surprised positively at 13.7% (+2.9 ppts qoq), vs Street expectation of 12.0-12.5%. Even after adjusting for one-offs (US$7m gain for settlement of FX related claims), core operating margin was still respectable at 13.0%, supported by lower other expenses and surge in other income. YTD order wins stand at $1.7b, on track with full year estimates of $5.5b. Net order book is at $13.6b, with visibility until 2019. Keppel and SMM have indicated that order enquiries remain healthy and they are leading contenders for new jobs from North Sea, GoM as well West Africa region. Deutsche keeps at Hold with TP $4.20. Credit Suisse has Neutral with TP $4.00 Nomura maintains Buy with TP $5.20 CLSA keeps at Buy with TP $5.60