SG: Sembcorp Marine- Soft 1Q12 results

Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD

Research House: OCBC

Price Call: HOLD

Target Price: 5.12

SEMBCORP MARINE 10 May 2012

SOFT 1Q12 RESULTS - Soft 1Q12 results lumpy in nature - Lower margins; but expect increase - Maintain HOLD for now Sembcorp Marine (SMM) reported a 13.7% YoY rise in revenue to S$942.6m and a 24.9% fall in net profit to S$113.1m in 1Q12, such that net profit accounted for 15.6% and 16.5% of ours and the street's full year estimates, respectively. Margins were lower in 1Q12 due to the initial lower margin from new design rigs; more higher margin projects should be recognised in the upcoming quarters. Meanwhile, enquiries for deepwater rigs remain strong. We tweak our margin assumptions and update the market value of SMM's stake in COSCO Corp. As such, our fair value estimate falls from S$5.70 to S$5.12. Maintain HOLD.