Sembcorp Marine - OCBC Investment 2016-04-25: Commences arbitration against Sete subsidiaries

Sembcorp Marine - OCBC Investment 2016-04-25: Commences arbitration against Sete subsidiaries SEMBCORP MARINE LTD S51.SI 

Sembcorp Marine: Commences arbitration against Sete subsidiaries 

  • Following our note on Sete Brasil’s plan to file for judicial recovery last week, Sembcorp Marine (SMM) announced that it has commenced arbitration proceedings against various subsidiaries of Sete Brasil to preserve its interests under the Sete contracts. 
  • Given the complexity of the situation and the various stakeholders involved, we expect this to be a long drawn-out process. 
  • On a more positive note, SMM believes that the S$329m provisions that it made in 4Q15 for the Sete contracts are sufficient under the present circumstances. 
  • Meanwhile, the market will likely continue to monitor SMM’s cashflows under this difficult operating environment, following operating cash outflows of S$989m in FY15 and S$508m in FY14, and investing cash outflows of S$932m in FY15 and S$770m in FY14. 
  • Net gearing stood at 1.0x as at end Dec 2015. 
  • Maintain SELL with S$1.08 fair value estimate.



Low Pei Han OCBC Securities | http://www.ocbcresearch.com/ 2016-04-25
OCBC Securities SGX Stock Analyst Report SELL Maintain SELL 1.08 Same 1.08


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