SembMar - SembMarine target raised by DMG to $5.30 on new orders

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: DMG

DMG raises SembCorp Marine’s (S51.SG) target to $5.30 from $4.70 and maintains its Neutral rating.



After SembMarine announced an order win from Noble Corp for two premium jackup rigs valued at US$400 million ($525 million) plus options for four more, the house estimates that SembMarine’s total outstanding order book is now around US$5.3 billion, with deliveries stretching up to 2Q 2013.



DMG raises its FY11-12F EPS estimates by 4.0% and 10% respectively to reflect the new jackup orders from Noble and higher margins on repeat orders.

Says its new SOTP target is valued at 19x FY11 P/E and FY12 P/E.



“We maintain Neutral given the limited upside of 6.0% from its last closing price and current valuation is already reflecting an upcycle for the rig building sector. Key upside risks are better-than-expected new order wins and stronger margins on new orders.” Its shares are up 1.8% at $5.08.