Sembcorp Marine (SMM) reported better-than-expected FY13 results. Revenue of S$5525.9m (+25%) was about 8% above our forecast (6% above consensus). Reported net profit came in at S$555.7m, +3%, while core earnings rose 11% to S$553m, which was 7% above our estimate (5% above consensus). SMM declared a final dividend of S$0.06/share and a special S$0.02 dividend, bringing the total payout to S$0.13 (unchanged from last year). Overall, management maintains a pretty upbeat outlook, backed by a net order book of S$12.3b with visibility stretching out to 2019. While we are largely keeping our FY14 estimates unchanged, our SOTP-based fair value slips from S$5.68 to S$5.26. Maintain BUY.
Better-than-expected FY13 showing
Sembcorp Marine (SMM) reported better-than-expected FY13 results. Revenue of S$5525.9m (+25%) was about 8% above our forecast (6% above consensus). According to management, revenue growth was driven by the 38% increase in rig revenue in 4Q13 (also up 51% in FY13). Reported net profit came in at S$555.7m, +3%, while core earnings rose 11% to S$553m, which was 7% above our estimate (5% above consensus). SMM declared a final dividend of S$0.06/share and a special S$0.02 dividend, bringing the total payout to S$0.13 (unchanged from last year).
Net order book stands at S$12.3b
SMM secured contracts worth some S$4.2b in 2013, while not quite matching the huge spike of S$11.0b in 2012, the contract wins were quite a bit higher than what it had secured in 2011 (S$3.7b) and 2010 (S$3.0b). According to management, jack-up rigs made up the bulk (62%) of the new orders. As at end 2013, net order book stood at S$12.3b, with visibility stretching out to 2019. Management notes that enquires continue to remain pretty strong for jack-up rigs, which comes as no surprise, given the wide range of jack-ups that SMM has to offer.
Still conservative on drill-ship accounting
Overall, management maintains a pretty upbeat outlook, noting that the demand remains strong for its big docks, including the four VLCC drydocks that started operations at its new 73.3ha facility in Aug 2013. Adds that construction on its Brazilian yard continues to progress well and remains on track to commence initial operations in 2H14 (SMM will be sending its first drill ship there in Jun). Speaking of which, SMM notes that it will continue to use "prudent approach" for the revenue/cost recognition for all seven drill ships; hence it says the market should not focus too much on the operating margin.
Maintain BUY with new S$5.26 FV
While we are largely keeping our FY14 estimates unchanged, our SOTP-based fair value slips from S$5.68 to S$5.26. Maintain BUY.
Sembcorp Marine (SMM) reported better-than-expected FY13 results. Revenue of S$5525.9m (+25%) was about 8% above our forecast (6% above consensus). According to management, revenue growth was driven by the 38% increase in rig revenue in 4Q13 (also up 51% in FY13). Reported net profit came in at S$555.7m, +3%, while core earnings rose 11% to S$553m, which was 7% above our estimate (5% above consensus). SMM declared a final dividend of S$0.06/share and a special S$0.02 dividend, bringing the total payout to S$0.13 (unchanged from last year).
Net order book stands at S$12.3b
SMM secured contracts worth some S$4.2b in 2013, while not quite matching the huge spike of S$11.0b in 2012, the contract wins were quite a bit higher than what it had secured in 2011 (S$3.7b) and 2010 (S$3.0b). According to management, jack-up rigs made up the bulk (62%) of the new orders. As at end 2013, net order book stood at S$12.3b, with visibility stretching out to 2019. Management notes that enquires continue to remain pretty strong for jack-up rigs, which comes as no surprise, given the wide range of jack-ups that SMM has to offer.
Still conservative on drill-ship accounting
Overall, management maintains a pretty upbeat outlook, noting that the demand remains strong for its big docks, including the four VLCC drydocks that started operations at its new 73.3ha facility in Aug 2013. Adds that construction on its Brazilian yard continues to progress well and remains on track to commence initial operations in 2H14 (SMM will be sending its first drill ship there in Jun). Speaking of which, SMM notes that it will continue to use "prudent approach" for the revenue/cost recognition for all seven drill ships; hence it says the market should not focus too much on the operating margin.
Maintain BUY with new S$5.26 FV
While we are largely keeping our FY14 estimates unchanged, our SOTP-based fair value slips from S$5.68 to S$5.26. Maintain BUY.
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