OCBC ups Sembcorp Marine to $6.30 vs $6.17

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

OCBC Investment Research has raised its target price for Sembcorp Marine (SCMN.SI), the world’s second largest oil rig builder, to $6.30 from $6.17 and kept its buy rating.

OCBC raised its order wins estimate for Sembcorp Marine this year to $4.5 billion from $4 billion after the firm announced its Jurong shipyard subsidiary will build two jack-up rigs for  a total of US$427.6 million ($539.3 million).

The deal was part of 4 options that Noble Corp has signed with the company in December.

Currently Sembcorp Marine has eight jack-up rig options worth about $2 billion, OCBC said.

“With increasing rig prices, we think Sembcorp Marine’s customers may face increasing pressure to exercise their options earlier rather than later,” it said in a report.

The brokerage has also raised its earnings estimates for Sembcorp Marine by 1.5-2% for the next two years. 

At 9:33 a.m., shares of Sembcorp Marine rose 0.52% to $5.77, and have gained 7.4% since the start of the year.