Company Name: SEMBCORP MARINE LTD
| Research House: CIMB | Price Call: BUY | Target Price: 6.28 |
CIMB Research raised its price target on Sembcorp Marine , the world’s second-largest rig builder, to $6.32 from $6.28 and maintained its outperform rating.
On Thursday, Sembcorp said its PPL Shipyard unit secured a $218.5 million contract to build a jack-up rig.
Sembcorp’s spare capacity had helped the yard to clinch the rig contract, which offers superior margins, CIMB said, adding that Sembcorp still had capacity for one or two more projects for 2013 delivery.
“We increase our non-Petrobras contract assumption to $2.5 billion from $2 billion in view of the recent rush in orders,” CIMB said in a report.
“We are expecting further frenzy in rig ordering in the next few months, especially for harsh-environment equipment and ultra-deepwater drilling rigs, which will benefit the builders.”
Sembcorp’s shares were flat at $5.2, while shares in rival Keppel Corp , the world’s largest rig builder, were also little changed. Sembcorp’s shares have gained 37% so far this year, while Keppel is up 17%.
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