Sembcorp Group - DBS Research 2019-10-25: Back To Fundamentals

Sembcorp Group | SGinvestors.io SEMBCORP INDUSTRIES LTD (SGX:U96) SEMBCORP MARINE LTD (SGX:S51)

Sembcorp Group - Back To Fundamentals




Jumping the gun on yard merger speculation?



Order wins remains the key.

  • Meanwhile, order win momentum remains the critical factor for Sembcorp Marine. Its orderbook (ex-Sete) has dwindled to an alarmingly low level of S$2.1bn, which implies < 1-year revenue coverage as at end Jun-2019. Order wins have been sluggish.
  • In 3Q19, Sembcorp Marine secured new contract wins worth S$400m, bringing YTD wins to S$575m, a far cry from the breakeven revenue level of S$2.5bn a year and market expectations of S$3-4bn new orders at the start of the year.
  • While enquiry levels have been rising, competition remains keen. It is worrisome that more asset owners have expressed plans to construct offshore platforms in China, capitalising on the availability of funding.


Re-rating hinges on order recovery.






Pei Hwa HO DBS Group Research | https://www.dbsvickers.com/ 2019-10-25
SGX Stock Analyst Report BUY MAINTAIN BUY 2.90 DOWN 3.200
HOLD DOWNGRADE BUY 1.45 DOWN 1.900



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