OCBC cuts Sembcorp Marine target to $5.70

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: BUY

Target Price: 5.70

OCBC Investment Research has cut its target price for the world’s second-largest rig builder, Sembcorp Marine (SCMN.SI), to $5.70 from $6.30 and kept its buy rating.

OCBC said it has cut its target price for Sembcorp Marine to take into account the unfavourable macroeconomic conditions for cyclical companies like rig builders, with the increasing risks of a U.S. economic recession.

However, OCBC said with oil prices hovering above US$75 per barrel ($90), this will sustain most capital expenditure in deeper water projects.  

“Though the fall in Sembcorp Marine‘s share price is understandable with the negative market sentiment and correction in oil prices, the stock looks over-sold at current levels,” OCBC said in a report.

At 11:22 a.m., shares of Sembcorp Marine were 0.79% lower at $3.78 and have fallen about 30% since the start of the year.