DBS trims Sembmarine

However analyst Janice Chua has maintained a buy rating on the Singapore-listed company in the belief that any downturn is likely to be shortlived.

SembCorp booked a profit of SGD 115.5m ($94.3m) in the three months to 30 September, down from SGD 222.5m seen in the same period a year ago.

Revenue fell away by a third to SGD 892.4m as income from its rig building division plunged by over 50%.

The result was below expectations due to slower than-expected drawdown of its orderbook on new projects, Chua said.

She has cut her target price to SGD 5.20 per share from SGD 5.85 previously but added that the outlook remains bright for the company in the longer term.

“While the stock could come under near-term pressure due to earnings cut on lower margin guidance, SMM remains a prime beneficiary of the current upcycle for demand of deepwater, harsh environment rigs,” said Chua.

“With a net orderbook of SGD $12.1bn, buoyed by record FY12 YTD order wins of SGD $9.1bn, revenue visibility is strong.

“However, we believe margins could be under pressure in the range of 10% to 13% as new rig designs are affected by the impact of learning curve in the initial ramp up phase.

“On a brighter note, higher shiprepair sales from capacity expansion at the new Tuas yard will raise the overall blended margins for the group in the long run.”