Sembcorp Marine

UOBKayhian on 2 Aug 2013

2Q13: Below consensus expectation. Excluding disposal gain, underlying operating margin is weak.
(SMM SP/HOLD/S$4.57/Target: S$4.60)
FY13F PE (x): 18.3
FY14F PE (x): 15.5

Below consensus expectation. Sembcorp Marine (SMM) reported a net profit of S$124.9m (-13% yoy) for 2Q13 and S$243.6m (-5% yoy) for 1H13. 1H13 net profit amounts to 47% of our full-year forecast of S$520m, but a lower 42% of consensus of S$584m. Results appear to be below consensus expectation, but within our expectation.

Maintain HOLD. Our target price remains at S$4.60, which values SMM’s own shipyard business at 15x 2014F earnings. Suggested entry price of S$4.10.