SINGAPORE (Sept 12): CIMB Research is maintaining “neutral” on Sembcorp Marine (SembMarine) with an unchanged price target of $1.65, which is based on 1.3 times price-to-book value (P/BV) -- the stock’s average P/BV before early-2010’s crude oil price rally.
This follows yesterday’s news of the marine and offshore engineering group’s wholly-owned Brazilian subsidiary, Estaleiro Jurong Aracruz, securing US$145 million ($194.7 million) worth of hull carry over works (hull COW) from Tupi BV.
See: SembMarine announces US$145 mil contract win for Brazilian subsidiary
In a Tuesday report, RHB says the recently-announced amount of new orders fall within its expectations, and therefore it makes no changes to its earnings forecast at this junction.
The research house estimates SembMarine’s current orderbook to stand at $3.8 billion with its projects ranging across drilling and non-drilling solutions, after securing about $265 million in orderbook replenishment in the year to date (YTD).
SembMarine should be able to add another $250 million to its orderbook for FY17, it adds.
“We expect orderbook replenishment to continue to be slow in FY17 and could start to pick up in FY18 if oil prices continue to stabilise,” concludes RHB.
As at 10:10am, shares in SembMarine are trading 1 cent higher at $1.59.
The stock is trading at 35.2 times in FY17 forecast recurring earnings with a dividend yield of 0.9%.
