Sembcorp Marine (SMM) reported a 7.6% YoY fall in revenue to S$1.12b and a 12.5% decrease in net profit to S$124.9m in 2Q13, such that 1H13 figures accounted for about 43% of our full year estimates, which we judge to be largely within our expectations. The last quarter saw fewer projects achieving initial recognition; more are expected in 3Q13. The new Tuas yard should also see revenue contribution in 2H13. Operating margin in 2Q13 was 13.0% vs 13.1% in 2Q12. After securing new orders worth about S$3.5b YTD, the group’s net order book stands at S$14.4b, a record high in SMM’s history. Meanwhile the stock price has appreciated by about 7.3% since our last report on 6 May 2013, and has outperformed the STI by about 11.1% over the same period. Maintain BUY with S$5.64 fair value estimate.
2Q13 results largely in line
Sembcorp Marine (SMM) reported a 7.6% YoY fall in revenue to S$1.12b and a 12.5% decrease in net profit to S$124.9m in 2Q13, such that 1H13 figures accounted for about 43% of our full year estimates, which we judge to be largely within our expectations. 1H12 figures accounted for about 48% of the whole year, but unlike then, 1) the last quarter saw fewer projects achieving initial recognition; more are expected in 3Q13, and 2) the new Tuas yard should see revenue contribution in 2H13. Operating margin in 2Q13 was 13.0% vs. 13.1% in 2Q12 and 13.7% in 1Q13.
1st drillship and Brazil yard on track
Construction of the first drillship is now about 35% complete, and is expected to leave Singapore no later than Feb next year for Brazil. This also means that construction and fittings of the South Quay in Estaleiro Jurong Aracruz should be completed by early next year. Meanwhile, the second drillship unit is expected to start revenue recognition in 4Q13-1Q14.
New Tuas yard promises to be capable and integrated
Phase 1 of the new Tuas yard is now complete with four drydocks, each at least 360m long. The third drydock, which has a length of 412m, can accommodate the longest container vessel in the world – the Maersk unit is still under construction in Daewoo’s yard. Besides being able to cater to a wide range of products, the yard has an innovative configuration that allows for faster turnaround and higher efficiency. Each crane in the Phase 1 area has a reach of at least 100m, and in total all of them can cover 86% of the land area, reducing the need for transport vehicles and corresponding crew.
Maintain BUY
After securing new orders worth about S$3.5b YTD, the group’s net order book stands at S$14.4b, a record high in SMM’s history. Meanwhile the stock price has appreciated by about 7.3% since our last report on 6 May 2013, and has outperformed the STI by about 11.1% over the same period. Maintain BUY with S$5.64 fair value estimate.
Sembcorp Marine (SMM) reported a 7.6% YoY fall in revenue to S$1.12b and a 12.5% decrease in net profit to S$124.9m in 2Q13, such that 1H13 figures accounted for about 43% of our full year estimates, which we judge to be largely within our expectations. 1H12 figures accounted for about 48% of the whole year, but unlike then, 1) the last quarter saw fewer projects achieving initial recognition; more are expected in 3Q13, and 2) the new Tuas yard should see revenue contribution in 2H13. Operating margin in 2Q13 was 13.0% vs. 13.1% in 2Q12 and 13.7% in 1Q13.
1st drillship and Brazil yard on track
Construction of the first drillship is now about 35% complete, and is expected to leave Singapore no later than Feb next year for Brazil. This also means that construction and fittings of the South Quay in Estaleiro Jurong Aracruz should be completed by early next year. Meanwhile, the second drillship unit is expected to start revenue recognition in 4Q13-1Q14.
New Tuas yard promises to be capable and integrated
Phase 1 of the new Tuas yard is now complete with four drydocks, each at least 360m long. The third drydock, which has a length of 412m, can accommodate the longest container vessel in the world – the Maersk unit is still under construction in Daewoo’s yard. Besides being able to cater to a wide range of products, the yard has an innovative configuration that allows for faster turnaround and higher efficiency. Each crane in the Phase 1 area has a reach of at least 100m, and in total all of them can cover 86% of the land area, reducing the need for transport vehicles and corresponding crew.
Maintain BUY
After securing new orders worth about S$3.5b YTD, the group’s net order book stands at S$14.4b, a record high in SMM’s history. Meanwhile the stock price has appreciated by about 7.3% since our last report on 6 May 2013, and has outperformed the STI by about 11.1% over the same period. Maintain BUY with S$5.64 fair value estimate.
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