Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
Research House: UOB KayHian
It notes management eyes demand for deepwater semi-submersibles newbuilds once deepwater drilling activities fully return in the Gulf of Mexico; “in the last rig building cycle, SMM’s and Keppel Corp’s (BN4.SG) strong contract wins were sustained for 4-5 years because a pick-up in jack-up orders was followed through with a pick-up in semi orders.”
The house says there has only been one semi order since the resumption of rig orders in October 2010; “traditionally, SMM and Keppel are shipyards favoured by rig contractors for semi newbuilds...the return of semi orders, coupled with a strong momentum in jack-up orders, will be the next share price catalyst.”
Company Name: SEMBCORP MARINE LTD
Research House: UOB KayHian
UOB KayHian upgrades Sembcorp Marine (S51.SG) to Buy and raises its target price to $6.10 fromS$4.90. It says SMM “is still a strong contender in the deepwater space despite not winning any of the 19 drillships ordered by rig contractors since September 2010.”
It notes management eyes demand for deepwater semi-submersibles newbuilds once deepwater drilling activities fully return in the Gulf of Mexico; “in the last rig building cycle, SMM’s and Keppel Corp’s (BN4.SG) strong contract wins were sustained for 4-5 years because a pick-up in jack-up orders was followed through with a pick-up in semi orders.”
The house says there has only been one semi order since the resumption of rig orders in October 2010; “traditionally, SMM and Keppel are shipyards favoured by rig contractors for semi newbuilds...the return of semi orders, coupled with a strong momentum in jack-up orders, will be the next share price catalyst.”
The house lifts its 2011, 2012 net profit forecasts by 20%-30% to $665 million and $668 million respectively.
The shares are down 0.2% at $5.27.
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