SembMarine +1.9%; 4Q beats street on better margins

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: Golman Sachs

SembCorp Marine (S51.SG) is +1.9% at $5.31 after the rig builder’s 4Q results came in above expectations and the board recommends a special dividend of $0.21, plus $0.06 final dividend.

Net profit came in 19.5% lower on year, off 19.1% on quarter at $239.4 million due to lower revenue, which fell 26.8% on year, 11.8% on quarter to $982.9 million; declines were due to fewer projects advanced to completion where revenue would accrue. 

Goldman Sachs says net profit was 49% above its expectations, due to higher-than-expected operating margins (30% vs 18% for 9M10). It notes the total FY10 payout of $0.36 (including the interim dividend), implies a yield of 6% on Wednesday’s close. 

The house raises its 2011 new orders forecast by 12% to account for a fuller potential pipeline, and raises 2011-2012E EPS estimate by 8% on better margins, thus lifts its target to $5.40 from $5.00. Still, it keeps a Neutral rating as “SMM’s valuations are less compelling than Keppel (BN4.SG),” with SMM’s P/E and P/B trading close to peak-cycle levels.