CGS-CIMB raises Sembmarine target price to 11 cents on reduced losses and prospect of new orders

The Edge Singapore
2-min read

Lim's call has yet to take into account a potential $4 billion order that might be won by the combined entity


CGS-CIMB’s Lim Siew Khee has kept her “hold” call on Sembcorp Marine but with a higher target price of 11 cents from 9 cents, following reduced operating losses for 1HFY2022.

Lim, writing in her Aug 15 report, notes that the net loss of $143 million was lower than her projection of $190 million.

Operating losses, meanwhile, was reduced from $422 million for 2HFY2021 to just $31 million for 1HFY2022, with no major impairment or cost over-runs incurred.

Revenue, in the same period, was up 166% y-o-y to $1.1 billion.

Sembmarine expects the second half to remain in the red but will be an improvement from 1HFY2022.

Year to date, the company has won some $1.9 billion worth of orders, bringing total order book to $2.5 billion. Lim expects the company to win another $0.6 billion worth of new orders.

Sembmarine is in the midst of merging with Keppel Corp’s offshore and marine unit.

Lim expects the combined entity to be profitable by FY2024 on the back of an expanded order book of $6.9 billion – a number that excludes a pending $4 billion order from Petrobras.

Trade publication Upstream has reported earlier that Keppel has edged out Sembmarine for this Petrobras contract and has been “qualified” by Brazil’s state-owned oil company to build a floating production storage and offloading platform, used for deep sea drilling.

If this contract is clinched by end of the year, the combined order book could hit $11 billion by FY2023 and thereby help turn the combined entity into a profitable one.

Lim’s higher target price 11 cents reflects her expectations of improved execution and more orders won thus far this year.

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