Analysts from CGS-CIMB Research and OCBC Investment Research (OIR) have continued to maintain “hold” on Sembcorp Marine (SembMarine) after the group revealed that it feel deeper into the red for the FY2020 ended December.
The group, on Feb 23, announced that it registered a $582.5 million loss for the period, compared to the net loss of $137.2 million in the FY2019 due to overall lower revenue as well as asset impairments and provisions recorded in 4QFY2020.
The loss was 50% wider than CGS-CIMB analyst Lim Siew Khee’s forecast of a $389 million loss, which was mainly due to the impairment losses of some $144 million.
While Lim has raised her target price to 14.1 cents from 13.9 cents due to SembMarine’s deep valuations and potential proxy to recovering prices in oil, she has slashed her earnings per share (EPS) estimates for FY2021 and FY2022 by 109% – 371% to account for lower margin on jobs.
SembMarine’s management has guided that it expects losses to continue in FY2021F, but Lim expects it to narrow y-o-y as projects under execution will be delivered during the year.
Meanwhile, the research team at OCBC is anticipating a “challenging” outlook for the group amid the relatively low oil prices. It has identified further risks to the counter, which include higher than expected capital expenditure (capex) requires in the future, risks relating to its businesses in Brazil and lower than expected new order flows.
“A recovery still looks to be a long way off,” it says.
That said the team has upped its fair value estimate on the counter to 14.5 cents from 14 cents at 0.5 times price-to-book (P/BV).
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“We continue to see multiple headwinds on low order book clarity and capex requirements. There remains the potential for impairments ahead, and while the financial position is less precarious following the rights issue, it is still tight and could limit the types of orders that the group can pursue,” it says.
Shares in SembMarine closed 0.3 cent lower or 1.9% down at 15.2 cents on Feb 24.
