Semb Marine 090409

After trading below the 2 uptrend supports (mid green, mid blue) yesterday, Sembcorp Marine recovered and even managed to close above the short-term uptrend resistance (upp blue). It also closed right on the 2.15 neckline (pink ...).

As you can see from the chart, the 2.15 neckline could prove a tough nut to crack. So we could see Sembcorp Marine trade sideways between the 2.04 support (blue ...) and 2.15 neckline (pink ...) as it builds a base.

If Sembcorp Marine can maintain trading within the short-term uptrend channel (blue), we could see it test the 2.15 neckline probably towards the end of the week.

If the 2.04 support breaks, we could see Sembcorp Marine revisit the 1.93 support (blue --), which is where the short-term uptrend support (low blue) meets the long term downtrend support (mid red).


For monday :

Support @ 2.15 (pink ...), 2.10 (mid blue), 2.07 (mid green), 2.04 (blue ...), 2.00 (red ...), 1.97 (mid red, red --), 1.93 (blue --), 1.90 (pink --), 1.87 (lightblue --), 1.86 (low blue, low red)

Resistance @ 2.15 (pink ...), 2.16 (upp blue, upp red), 2.17 (upp green), 2.25 (green ...), 2.35 (green --)

Semb Marine 270309

A day after my analysis on 20 mar, Sembcorp Marine burst into life and went on a blistering run, breaking several key resistances along the way! It tested the key 1.93 resistance (blue ...) today but closed 1.90 neckline (pink --).

We could see Sembcorp Marine trade sideways due to inevitable profit-taking. We could see it trade between the 1.87 support (lightblue --) and 1.93 resistance (blue ...). We could also see Sembcorp Marine consolidate around the 1.87 level, which is where the long term downtrend resistance (upp red) meets the uptrend support (low blue) somewhere towards the end of next week.

If Sembcorp Marine can trade above the uptrend support (low blue), there's a good chance we might see it attempt to test and break the 1.93 resistance (blue ...).

However, if Sembcorp Marine breaks the 1.82 support (lightblue ...), we could see it revisit the 1.74 support (red ...), or even the 1.69 support (blue --).


For monday :

Support @ 1.90 (pink --), 1.87 (lightblue --), 1.84 (low blue), 1.82 (lightblue ...), 1.79 (mid red), 1.78 (red --), 1.77 (upp green), 1.74 (red ...), 1.69 (blue --)

Resistance @ 1.93 (upp red, blue ...), 1.94 (mid blue), 1.97 (upp blue)

Semb Marine 200309

Three days after my analysis on 13 mar, Sembcorp Marine tested the 1.55 resistance (red ...), although it just about stayed above the crucial 1.49 support (blue --) after testing it twice on the last 2 days.

We could see Sembcorp Marine trade between the 1.49 support (blue --) and 1.55 resistance (red ...) for the time being as it tries to build a base. If Sembcorp Marine can also continue to trade within the uptrend channel (green), we could see it attempt to break the 1.55 resistance sooner rather than later.


For monday :

Support @ 1.49 (mid red, mid green, blue --), 1.46 (pink ...), 1.45 (mid blue), 1.44 (low red), 1.41 (low green, red --)

Resistance @ 1.55 (red ...), 1.56 (upp green, upp red), 1.58 (upp blue), 1.59 (green ...), 1.61 (green --)

Semb Marine 130309

After my last analysis on 27 feb, Smebcorp Marine broke the crucial 1.38 support (pink --), and traded sideways for about 2 weeks before coming to life today, closing above the other crucial neckline of 1.48 (blue --) with the highest volume since end feb.

As you can see from the chart, the 1.48 neckline (blue --) is very important for Sembcorp Marine as the downtrend resistance (upp red) meets the uptrend support mid blue). If it wants to sustain this positive momentum, Sembcorp Marine would have to continue to trade above the 1.48 neckline (blue --).

If Sembcorp Marine breaks the 1.48 neckline, we could see it sliding back to the 1.41 support (red --). However, if the support holds, we could see Sembcorp Marine test the 1.55 resistance (red ...) very soon.


For monday :

Support @ 1.48 (mid blue, blue --), 1.46 (pink ...), 1.44, 1.41 (red --), 1.38 (mid red, pink --)1.34 (low red)
Resistance @ 1.51 (upp red), 1.53 (upp blue), 1.55 (red ...), 1.59 (green ...) 1.61 (green --)

Semb Marine 270209

Sembcorp Marine failed to break the 1.48 resistance (blue --) and even closed below the 1.41 support (red --).

As you can see from the chart, the uptrend support (low blue) meets the downtrend resistance (upp red) at 1.38, which is the opening/closing price on 24 feb. If Sembcorp Marine breaks below this level, we could see it retest Oct 08 lows.


For monday :

Support @ 1.37 (low blue), 1.33 (mid red), 1.24 (low red)
Resistance @ 1.44 (upp red), 1.48 (blue --), 1.535 (upp blue), 1.55 (red ...)

Semb Marine 250209

Sembcorp Marine broke out from the downtrend resistance (upp red) with volume today. It ran smacked into the 1.48 resistance (blue --) before closing at 1.46, which coincidentally is the opening price on 18 and 20 feb.

If Sembcorp Marine manages to break the 1.48 resistance (blue --), we could see it 1.55 neckline (red ...). A bigger resistance looms at 1.61 (green --).


For tomorrow :

Support @ 1.41 (upp red, red --), 1.36 (low blue), 1.26 (low red)
Resistance @ 1.48 (blue --), 1.52 (upp blue), 1.55 (red ...), 1.61 (green --),

Semb Marine Research Report

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)

Semb Marine Research Report

by BNP Paribas (2 Dec)

LOWER but not low oil prices: We believe it is reasonable to question the general outlook for the oil industry following the recent news about potential order cancellations at Keppel Corp.

For Sembcorp Marine (SembMarine), we are concerned if the offshore orders would decline drastically and coupled with order cancellations would decimate the order books.

Seadrill, a client of SembMarine, is facing difficulties in getting financing for some of its offshore orders with SembMarine. This is resulting in a potential order cancellation by Seadrill.

Analysis of Seadrill's financials gives us a better picture of the underlying situation. Seadrill's profit & loss and cashflow positions are good, indicating strong underlying business fundamentals. For Q3 2008, net profit increased 211 per cent y-o-y to US$69 million. Operating cashflow stood at US$730 million (up 12 per cent y-o-y).

It was poor corporate finance decisions that led to difficulties. Net gearing in Q3 2008 was 163 per cent, up from 122 per cent q-o-q. There are also other factors working against it - total return swaps, aggressive off-balance sheet financing and large equity investment stakes.

Oil prices have now declined for the fifth month since its high of US$147 per barrel in July 2008 and yet rig utilisation and day rates are still strong. Our positive argument for SembMarine is dependent on the recovery of overall market sentiment and not earnings.

Also, lower oil prices at US$50-60 per barrel are not only sustainable for oil producers, they ensure that costs for most economic activities will be lower in 2009. We believe cost deflation will be the first step in market sentiment recovery.

Lower oil prices will not only keep demand alive but also keep alternative energy out, and make it easier for producers to undertake long-term exploration decisions. This in turn will ensure SembMarine stays sustainably busy.

Valuation presents opportunity; SembMarine continues to trade well below the historical period of 1997-2003. Our TP remains at 12 times 2009 PE. The dividend yield is attractive at levels above 10 per cent.

-Research Report by BNP Paribas (2 Dec)

More than just rig builders

by VINCENT WEE (24 Nov)

LOOKING at the one-year price charts of SembCorp Marine, Keppel Corp and the benchmark crude oil grade, a close correlation appears.

Both SembMarine and Keppel Corp hit highs of $4.61 and $12.34 respectively on June 2, when the price of crude oil was on an unprecedented uptrend and just a month before it hit an all-time high of over US$147 in July.

When the oil price started sliding below US$100 per barrel after that high point, the stock prices of the two counters followed suit. And when oil prices briefly spiked back up above US$100, the stock prices of the two counters mirrored this movement, albeit on a much smaller scale.

With oil falling below US$50 last Thursday, the prospects for the two counters look poor if investors were to assume that the correlation will hold. However, the fundamental question that needs to be asked is if that rationale for the correlation was valid in the first place.

Firstly, new order announcements have slowed, not stopped, in the second half. Keppel Offshore and Marine managing director and chief operating officer Tong Chong Heong was recently quoted as saying that the group had 'not yet reached a point of panic' because most of its projects were properly funded and the yards had work all the way till about 2012 to 2013 with a net order book of $13 billion as at Sept 30.

Trying to pin down an oil price at which continued investment in new rigs will stop is at best an academic exercise. But the fact remains that demand for oil will continue to rise and so will the demand for rigs needed to find that oil.

According to a recent report by Ocean Shipping Consultants, even in a low case (price) scenario, offshore oil production is forecast to increase by 39 per cent between now and 2020.

The other key fact is that even as oil demand increases, the supply of rigs will not keep pace. Over 65 per cent of the global mobile rig fleet is over 25 years old and should be due for scrapping but owners have deferred this due to high current charter rates. New building orders account for just 20 per cent of the current offshore rig fleet.

Secondly, while both companies are known as rig builders accounting for more than two-thirds of global newbuilds and while it seems that the big rig deals with impressive headline numbers have tapered off, it should be realised that this is not all that they can do. For example, each of them are also recognised ship repair and conversion yards in their own right.

In fact, the margins on some of the other less attention-grabbing jobs they undertake are actually better than the rig jobs. Repair and conversion jobs see average margins of 25-30 per cent while the usual margin on a rig newbuild is no more than 10 per cent.

Nonetheless, contracts continue to trickle in and the type of jobs being secured seem to be indicating just such a shift.

Keppel announced several conversion and fabrication contracts worth a total of $340 million last week. SembMarine's most recent contract for the first in a series of LNG carrier life extensions was just last month.

DMG and Partners analyst Serene Lim notes in a recent report on SembMarine that 'the repair and conversion business division is counter-cyclical in nature'.

'In this weak credit market whereby we could possibly expect slowing new order momentum, we believe this non-rig building segment is likely to bring in relatively stable revenue stream.'

' We noted that historically, these combined revenue contributions from repair and conversion projects had been increasing through these years, $1.4 billion in FY05, $1.5 billion in FY06 and $1.9 billion in FY07,' she adds, maintaining her 'buy' call and a target price of $2.49.

OCBC Investment Research's Kelly Chia, meanwhile, resumed coverage of Keppel with a 'buy' call also and a fair value price of $5.20.

-Research Report by VINCENT WEE (24 Nov)

More selling as recession fears mount

by R SIVANITHY (20 Nov)

ST Index sheds 3 per cent as part of region-wide stocks hammering after Wall Street dives

WALL Street's 5 per cent plunge to a five-and- a-half-year low on Wednesday sent stocks in this part of the world tumbling yesterday, serving a grim reminder to investors everywhere that the worst is not over for equities.

The US market's rout came after the release of more poor economic numbers, including thin housing starts and low consumer prices - with both figures fuelling deflationary worries.

Adding to the gloom yesterday was news that Japan's exports fell the most in six years, confirming that the global slowdown is taking a firm grip.

The result was a 4 per cent slump in Hong Kong's Hang Seng Index and a 51.64-point or 3.1 per cent loss for the Straits Times Index to 1,613.95, taking it about 13 points above its most recent low of 1,600.28, reached on Oct 24.

Banks were again hit. All three closed weaker, led by DBS's 34-cent slide to $9.16. Daiwa Institute of Research said in a Wednesday report on Singapore banks that it sees no reason to change a previous 'negative' view of the sector.

'We believe the quarterly net profit decreases (an average of 23 per cent) experienced by all banks for Q308 are a precursor of the weak operating conditions they will face in 2009 and 2010,' Daiwa said.

'We believe the sector is set for another depressing industry-wide decline of 8.2 per cent year-on-year for 2009, led by further year-on-year declines in fees and other income and a flare-up of loan-related allowances.' It maintained its 'underperform' ratings on UOB and OCBC, and a 'hold' on DBS.

Government-linked conglomerates continued to be sold down yesterday, though Keppel Corp managed to close unchanged at $4.49 after touching $4.30. Sembcorp Industries (SCI) dropped 12 cents to $2.03, while Sembcorp Marine (SMM) fell 15 cents to $1.65.

In a Nov 18 report, Deutsche Bank maintained a 'buy' on all the three stocks, with price targets of $7.80, $3.55 and $2.45 for Keppel, SCI and SMM respectively.

'While near-term uncertainties remain due to the global financial and economic turmoil, we believe long-term trends remain intact for the offshore and marine sector and through a flight to quality, may likely see future orders gravitate towards the more established players,' said Deutsche.

Credit Suisse maintained its 'underweight' rating on Singapore in a Nov 19 strategy report, saying 'low solvency risk does not mean no risk'. It did state, however, that Singapore Inc is well-placed to weather the storm because corporate debt at 32 per cent for FY08 is easily manageable.

In his latest Insights, AMP Capital's strategy head Shane Oliver said recession is now advanced in key developed economies such as Japan and Europe, and it is only a matter of time before the US officially declares that it too is in recession.

He also said that although there are some common features, this is not a normal slump that typically comes as part of a boom-bust cycle.

'Two considerations make this global slump potentially more serious and hence add to the level of uncertainty,' he said. 'First, we are faced with significant systemic risk as the flow of credit has been radically impaired. On top of this, most countries are weakening at the same time. The synchronisation in economic downturns in the US, Japan and Europe is now making the global downturn worse.'

-Research Report by R SIVANITHY (20 Nov)

Singapore Strategy

by DMG & Partners Securities (19 Nov)

TARGETING survivors: Some corporates may not have banks' support through this rough patch. The market remains concerned about the impact of global economic deterioration on corporate earnings.

Investors are closely scrutinising companies that have overstretched via massive borrowings to fund their growth, or have yet to generate sufficient operating cash flow, as these corporates are at the highest risk of breaching bank covenants if business conditions worsen further.

On the other hand, there are corporates whose balance sheets are strong. Even with the deterioration in business conditions, banks will continue to support these corporates for their working capital and capital expenditure needs.

These are the companies that are seen to survive this downturn. When economic conditions eventually improve, these companies could return to similar levels of profit or even exceed their previous peak profit levels.

Over the past few weeks, we have reviewed the financial forecasts and TPs for all the stocks under our coverage. With the cuts in TPs, we now arrive at a fair Straits Times Index (STI) target of 2,080 over the next 12 months.

However, in the short term, we see further weakness which could bring the STI to as low as 0.95 times P/B, or a 1,560 level. With the downside of about 10 per cent from the current STI level and difficulty in pinpointing the exact bottom, we recommend investors to start nibbling at stocks that will survive this crisis.

We have identified the following big-cap stocks which we believe will ride through the crisis and emerge stronger:

CapitaLand ('buy', TP: $3.05): At current levels, CapitaLand is trading at a 24.4 per cent discount to its end-Q3 2008 NAV of $3.60. During past crises, CapitaLand has been trading at 40-60 per cent discount to NAV. Taking the view that CapitaLand is now of a different stead compared to then, we have pegged our RNAV base-case value of $5.05 to a 40 per cent discount, implying end-2009 fair value of $3.05.

Risks include further tightening of credit markets and more macroeconomic dampeners. Catalysts include more government measures to prop up domestic residential property markets and further timely divestments or acquisitions.

ComfortDelGro ('buy', TP: $1.63): Plunging crude oil prices will stimulate earnings.

Sembcorp Marine ('buy', TP: $2.49): Sustainable amid challenging conditions. Our earnings forecasts have factored in slowing new order momentum.

Singapore Press Holdings ('buy', TP: $4.35): Over the years, SPH has successfully diversified its business, moving into magazines, property and the Internet. Recurring income in the current two financial years should be aided by the property segment, thanks to high rentals for its flagship Paragon mall as well as its sold-out Sky@eleven project.

StarHub ('buy', TP: $2.68): There have been some concerns over its gearing, but a closer look at its financials would bring comfort to investors. Net gearing for the company stood at 7.6 times in Q3 2008, which ranks it among the highest in the market.

However, there was a capital repayment of $1.1 billion, which resulted in shareholders' equity shrinking to a mere $103 million. If not for this, the net gearing would have only been 0.7 times - a decent figure, given that StarHub paid out dividends of $621 million in 2005-07, and declared another $230 million this year. The cash it generates is also more than sufficient to repay its debts.

ST Engineering ('buy', TP: $2.83): Robust financials, good cash flows from operations, long-term prospects still bullish, and orders remain strong.

United Overseas Bank ('buy', TP: $16.00): Conservative loan expansion over the past four years will keep non-performing loans contained. Our earnings forecasts have factored in huge loan provisions. Interest income should be cushioned by its relatively high loan-to-deposit ratio.

Other mid-cap stocks that also deserve attention are:

Ascendas Reit ('buy', TP: $1.75): Its present price presents a good entry point for investors to buy into a strong sponsor-backed industrial Reit with quality assets and an established track record, as well as stable income backed by long lease tenures.

China Milk ('buy', TP: $0.52): The company is able to generate consistent free cash flows over the years. We believe China Milk can ride through this crisis well.

Indofood Agri Resources ('buy', TP: $1.12): Indofood Agri has the ability to obtain refinancing for its short-term debt, despite the current credit tightening environment. While lower crude palm oil prices will affect earnings, this is partially mitigated by Indofood Agri's growing cooking oil & fats segment.

Li Heng Chemical Fibre ('buy', TP: $0.685): With capital expenses fully budgeted for, and at least another one billion yuan ($224 million) worth of operating cash inflow from H2 2008 to FY2009, the group should be able to withstand any further repercussions from the credit crisis and a slowdown in its business environment.

Raffles Medical Group ('buy', TP: $0.77): Strong operating cash flows should help it face challenges ahead. It has a healthy patient load, a diversified patient base, and a healthy balance sheet.

Venture Corp ('buy', TP: $7.40): Venture has managed to generate quarterly revenue and core operating profit exceeding $900 million and $66 million, respectively, since Q1 2007. While the prospects for Venture may have taken a step back in recent times due to the global economic downturn, we do believe that the present selldown in its share price appears over-extended.

-Research Report by DMG & Partners Securities (19 Nov)

Singapore Strategy

by CIMB-GK RESEARCH (18 Nov)

THE Q3 2008 earnings season has just concluded. Despite marked-down expectations by our analysts, the number of companies with earnings misses still outnumbered those that sprang positive surprises by 2:1.

Sectors that disappointed this quarter were banks, transport, telcos, manufacturing and S-chips. Sectors that beat expectations were plantations and offshore and marine. In the past three months, we had pulled down our expectations for Straits Times Index (STI) EPS growth.

We now expect STI earnings to contract 6.3 per cent y-o-y in 2008 and 13.7 per cent y-o-y in 2009. The bulk of our earnings cut came in October/November - we chopped our estimates for STI 2008 EPS by 8 per cent and 2009 EPS by 27 per cent in that period. Whether these expectations are low enough remains to be seen. STI earnings fell on average 28 per cent in 1997/98, 2001 and 2003.

Few places to hide in a global recession: In the past three months, the MSCI Singapore Free Index fell 39 per cent. In Singapore, the banking, property, real estate investment trust (Reit), multi-industry, plantations, transport and manufacturing sectors underperformed the index.

The two worst-hit sectors were plantations and transport, as commodity prices went into free fall and the shipping sector suddenly saw demand evaporate, largely from the developed world. Only telcos, media and services outperformed the index.

Our top picks: As the STI attempts to find its floor in the next six to nine months, stocks that we like are either stable, cash businesses that provide decent yields despite recessions or stocks that will emerge from this recession for the better, benefiting from a strong balance sheet now or in a position to emerge as leaders in their industries. The opportunity to pick these stocks at marked-down valuations is their key attraction.

In the former category, the stocks include MobileOne (M1), Singapore Post, ComfortDelGro, Cerebos Pacific, Parkway Life Reit, Sembcorp Marine, Singapore Press Holdings and SP Ausnet. In the latter category, our favoured stocks are Parkway Holdings, CapitaCommercial Trust, Wheelock Properties, City Developments, Venture Corp, Singapore Exchange and Wilmar.

For the next six months, our preferred sectors are media, S-Reits and telcos. The sectors we are wary of are banks, property, transport and consumer discretionary.

We view recent rallies as relief rallies from oversold positions. As the market grapples with the realities of a recession, we expect the STI to lose ground and find a floor anywhere between 1,200 and 1,600 - recession P/B levels.

As companies streamline their cost structures and as governments pump-prime in zest and cut interest rates to near zero in the coming months, we expect the seeds to be sown for an eventual recovery from H2 2009. By our estimation of the typical duration of a recession, a market bottom in mid-2009 seems likely. Our end-2009 STI target is set at 2,040, based on a bottom-up methodology.

-Research Report by CIMB-GK RESEARCH (18 Nov)

Semb Marine 141108

Sembcorp Marine was one of the few that ended the week on a rather strong note. You can see from the chart that Sembcorp Marine broke the downtrend resistance (upp black), after almost testing the 1.95 support (red ...), ending a three day downtrend.

The next resistance for Sembcorp Marine would probably be at 2.09, which is the day high for 10 nov, and the Doji it created on 10 oct, and also roughly indicated by the downtrend resistance (mid red).

If Sembcorp Marine can maintain trading within the uptrend channel (blue), we could see it test the 2.09 level next week. If the uptrend support breaks, we could see Sembcorp Marine revisiting the 1.90 level.



For monday :

Support @ 2.04 (pink --), 1.95 (low blue, red ...), 1.925 (low red), 1.89 (mid pink), 1.85 (upp black)
Resistance @ 2.083 (mid red), 2.17 (upp blue), 2.25 (red --)

Semb Marine 311008

Sembcorp Marine managed to recover what it has lost when it hit a low of 1.15 on 28 oct. It managed to close just above the 1.76 neckline (blue ...) and long term downtrend support (low red).

However, Sembcorp Marine still could not break the 1.88 high, the opening price of 16 oct, from where it collapsed.

If Sembcorp Marine opens above the 1.76 neckline on monday, there's a great chance we might see it test the 1.88 high again, and close the gap to 1.95 (10 oct low), which incidentally, is also the downtrend resistance (mid pink).

However, if Sembcorp Marine opens below the 1.76 neckline, we could see it revisit the 1.59 support (green --) or even the 1.40 support (green ...).



For monday :

Support @ 1.76 (low red, blue ...), 1.69 (pink ...), 1.65 (low blue, low pink), 1.59 (mid black, green --), 1.48 (blue --), 1.40 (green ...)

Resistance @ 1.954 (mid pink), 1.99 (upp black), 2.03 (upp blue, pink --), 2.05 (mid red), 2.25 (red --)

Offshore and Marine Sector Research Report

by CIMB-GK RESEARCH (21 Oct)

IS the bubble bursting? Offshore & marine stocks have been under pressure for several months, falling by more than 70 per cent YTD.

The drop mirrors falling oil prices on the back of a troubled economy and shrinking demand, worsened lately by tight global credit which has increased insolvency risks among shipowners and offshore operators. Singapore big caps in the offshore & marine sector - SembCorp Marine and Cosco Corp - have not been spared in the stock sell-down.

We see more frantic sales of unchartered assets in the market where operators are pushing back their newbuild plans and starting to look for bargain units built for speculation.

A recent decision by Atwood Oceanics not to exercise its option for a third semi-submersible with Semb- Marine could be a key sign of the start of a rig downcycle. While we had expected orders to slow down even before the credit crisis, it now looks like the credit turbulence could hasten the slowdown of orders going into 2009.

Earnings growth for 2009 has been secured by orders but growth beyond that could be at risk if the order momentum decelerates faster than expected.

The adverse credit market has triggered occurrence of bankruptcies, unstable credit lines and higher lending spreads. We are cutting our order assumptions for 2009-10 by 13-44 per cent for SembCorp Marine. With our blanket cut, we are downgrading our earnings estimates by 6-12 per cent for SembCorp Marine.

Downgrade sector to 'neutral' from 'overweight'; SembMarine remains our top pick. Maintain 'outperform' on SembCorp Marine as it is trading below its 10-year trough valuation of about 10x P/E.

Maintain 'underperform' on Cosco.

-Research Report by CIMB-GK RESEARCH (21 Oct)

Semb Marine 171008

After opening below the downtrend support (mid black, mid red) on 16 oct, Sembcorp Marine went on to quickly demolished the 1.85 (18 apr 2005 low) support and closed on the downtrend support (low pink).

Today was just as bad as Sembcorp Marine even broke the 2nd downtrend support (low black), closing right on the long term downtrend support (low red).



We can see the downtrend support (low black) meeting the long term downtrend support (low red) around the 1.54 level sometime next week. If these 2 supports fail to hold, we could see Sembcorp Marine heading for the 1.40 level as indicated by the downtrend support (low black).



For Monday :

Support @ 1.547 (low red)
Resistance @ 1.58 (low black), 1.59 (green --), 1.69 (low pink), 1.76 (blue ...), 1.80 (mid black)

Semb Marine 151008

What a roller-coaster ride it has been for Sembcorp Marine ! From a low of 1.95 on 10 oct, to a high of 2.73, and now closing at 2.04 today, all in a matter of 4 days !

We could see Sembcorp Marine trading between the downtrend channel (red) for the next few days. The 2.00 support should be quite resilient as the 2 long term downtrend supports(low pink, low red) meets around there.

However, if the support breaks, we could see it hitting the 18 apr 2005 low of 1.85.



For tomorrow :

Support @ 2.02 (low red), 2.00 (low pink), 1.92 (low black), 1.85
Resistance @ 2.22 (mid black), 2.24 (mid red), 2.35, 2.40

Semb Marine 031008

Sembcorp Marine opened below the 2 downtrend supports (low red, mid pink) today. It also came close to testing the big volume support (2.66 on 30 sep), before closing above the downtrend support (low black).

We could see Sembcorp Marine continue to trade within the downtrend channel, or at best, sideways, and hitting the 2.64 level (low pink meets low black) before there is a rebound.



For monday :

Support @ 2.68 (low black), 2.66, 2.65 (low pink)
Resistance @ 2.86 (low red), 2.91 (mid pink), 2.94 (mid black), 2.99 (red --), 3.10 (upp black)

Semb Marine 300908

Nobody could have, or even expected Sembcorp Marine to hit a low of 2.33 today. The last time Sembcorp Marine even went below the 2.50 level was almost 3 years ago, back in nov 2005.

Sembcorp Marine opened even below the long term downtrend support (low pink), hitting a low of 2.33 briefly, before recovering more than 70cents, and then closing on the 2.99 support (red --). What a dramatic day for Sembcorp Marine !

Where does Sembcorp Marine go from here? For sure, we won't be seeing Sembcorp Marine hitting such lows again.

If Sembcorp Marine manages to stay above the downtrend supports, we could see it trading sideways, with the upside capped by the 3.15 resistance (blue --).



For thursday :

Support @ 2.99 (red --), 2.92 (low pink), 2.88 (low red), 2.66
Resistance @ 2.99 (red --), 3.15 (blue --), 3.184 (mid red), 3.206 (mid pink), 3.41 (green ...)

Semb Marine 080908

After flirting with the 3.75 neckline (red ...) for the most part of aug, Sembcorp Marine finally gave way on 3 sep. We even saw Sembcorp Marine gapping down below the 1st long term downtrend support (mid pink) the next day, and closed right on the 3.41 support (blue --).

Further selling pressure pushed Sembcorp Marine below the 2nd long term downtrend support (low pink) and the 3.36 support (green ...) on 5 sep. The last time Sembcorp Marine hit the 3.2+ levels was back in Jan 2008.

Today, Sembcorp Marine managed to recover above the 2 downtrend supports (low red, low pink) and the 3.41 support (blue --). However, volume is diminishing, so there could be a possibility that this recovery may not be sustained.

Any upside could be capped by the downtrend resistance (mid red). We could then see Sembcorp Marine trading between the 3.36 support (green ...) and the downtrend resistance (mid red).



For tomorrow :

Support @ 3.41 (mid blue, blue --), 3.36 (green ...), 3.335 (low pink), 3.31 (low red), 3.21 (low blue)
Resistance @ 3.48 (mid red), 3.51 (pink ...), 3.545 (mid pink), 3.567 (upp blue), 3.66