She expects SembMarine to report losses of $71 million and $500,000 in FY2019 and FY2020, respectively. She has also downgraded her recommendation on the stock to “reduce” from “add”, and lowered its price target to $1.16 from $1.75 previously. “A negative outcome of the [Operation] Car Wash investigation, poorer-than-expected orders and impairment of [its] Brazilian yard are key de-rating catalysts,” writes Lim in a July 30 note.
(Aug 5): Disappointing results, slow order momentum and a weak outlook by the management are among reasons why investors should stay on the sidelines or consider getting out of Sembcorp Marine. Another factor is the potential blowback from a Brazilian bribery investigation that could further pummel shares of the offshore and marine services provider.
Unsurprisingly, analysts have turned bearish on SembMarine’s prospects. CGS-CIMB’s head of research Lim Siew Khee -expects the company’s weak orders to translate into widening losses in 2H2019 and estimates an earnings before interest and tax margin of about 2.5% to 3.3% for FY2020 and FY2021.
