by CIMB-GK (10 Dec)
SEMBCORP Marine has secured a $200 million contract to convert a VLCC to a FPSO for Modec, a Japanese EPCI (engineering, procurement, construction and installation) player. Delivery is planned for Q1 2011.
We believe that the outlook for the production segment is more positive than rig-building. Oil exploration and discoveries have accelerated in the past few years, driven by an unprecedented spike in oil prices. Therefore, we believe that the demand for production-related equipment remains to support the recent oil discoveries.
Upstream reported that SMOE, SembMarine's subsidiary, together with an Italian contractor Saipem, is bidding for a US$600 million EPCI processing platform contract from Premier Oil's Gajah Baru gas project in West Natuna Sea, Indonesia. The contract is expected to be finalised by end-2008.
We believe that the production segment in the offshore & marine value chain would be less susceptible to credit volatility as FPSOs and offshore platforms are typically owned and operated by oil companies with stronger financial track records.
No change to our forecasts as this win is within our order-book assumptions. Total order book is now about $10 billion. SembMarine remains our top pick in the offshore & marine sector for its strong balance sheet (net cash) and attractive dividend yields. The stock is cheap at its historical low of 6x CY10 PE. Stronger-than-expected order wins could provide stock upside.
-Research Report by CIMB-GK (10 Dec)
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment