DnB NOR upgrades Sembcorp Marine to hold from sell

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: DnBNOR Markets

Price Call: HOLD

Target Price: 5.30

DnB NOR has upgraded Singapore oil rig builder Sembcorp Marine (SCMN.SI) to hold from sell and raised its target price to $5.30 from $5.00.

DnB NOR said Sembcorp has beaten its margin expectations for the past four quarters up to January-March period, and the second-quarter results of the firm’s rival oil rig builder Keppel Corp (KPLM.SI) last week suggest uptrend in margins.

Sembcorp will report its second-quarter earnings on Aug 2.

Sembcorp has secured nearly $2.2 billion of new orders year-to-date compared with Keppel’s $7.4 billion, DnB NOR said.

It added that across the industry, the order momentum in the second half is expected to be slower than the first half due to tighter yard slots for 2013 delivery.

But Sembcorp could benefit as it still has available slots for delivery in the second half of 2013, DnB Nor said. 

At 11:49 a.m., Sembcorp shares were up 1.9% at $5.43. The stock has risen around 1% so far this year.