SEMBCORP MARINE LTD (SGX:S51)
Sembcorp Marine - Trend Of Losses To Continue
- S$137m net loss in FY19.
- Competition remains intense.
- Potential buyer for 2 drill ships.
Wider than expected net loss in FY19
- Since our last report Sembcorp Marine - FY19 Net Loss To Widen on 13 Nov 2019 with a Sell rating on Sembcorp Marine (SGX:S51), Sembcorp Marine Share Price has corrected by about 8% vs. the STI’s 2% fall. This morning’s results release for the company is also not supportive for the stock.
- The group posted a net loss of S$78m in 4Q19, bringing FY19 net loss to S$137m, which was wider than expected.
- Overall business volume remained low, and looking ahead this is likely to continue for all segments expect for repairs and upgrades, which continues to improve, underpinned by IMO regulations that require installation of ballast water treatment systems and gas scrubbers.
- Challenges remain, in particular supply chain disruptions due to the COVID-19 virus outbreak, which could affect execution of projects. Competition remains intense for all business segments.
2020 to continue to see losses
- Looking ahead, Sembcorp Marine expects the trend of losses to continue into 2020.
- Despite difficult market conditions, the group secured new contracts of S$1.5b in FY19, higher than the S$1.2b in FY18. Net order book stands at S$2.44b, which is about a year’s worth of revenue.
- The group is now in discussions with a potential purchases for the completion of two drill ships.
Doing away with quarterly reporting
- With the SGX’s decision in Jan 2020 to do away with the quarterly reporting (QR) requirement for most listed companies, Sembcorp Marine will accordingly cease QR from 1Q20 onwards and release only the group’s half-year and full-year financial results. Meanwhile, as expected, no dividend was declared.
- We fine-tune our numbers and our fair value estimate slips slightly from S$1.24 to S$1.23.
- See Sembcorp Marine Share Price; Sembcorp Marine Target Price; Sembcorp Marine Analyst Reports; Sembcorp Marine Dividend History; Sembcorp Marine Announcements; Sembcorp Marine Latest News.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2020-02-20
SGX Stock
Analyst Report
1.23
DOWN
1.240
