Sembcorp Marine

DMG & Partners on 18 March 2013

SEMBCORP Marine (SMM)'s PPL Shipyard has secured two new jackup rig orders from Mexico-based Oro Negro for U$417 million. The price of the rigs at U$208.5 million per rig is similar to Perisai's option unit exercised in February 2013 but is 4 per cent lower than Oro Negro's first two jackup orders in December 2012. We believe the share price will react positively to the news.

However, we maintain "neutral" on the stock as we see limited upside to our TP of S$4.76, which values the stock at 17.2x FY13 forecast P/E.

NEUTRAL