SEMBCORP MARINE LTD (SGX:S51)
Sembcorp Marine - Saying Goodbye To The Parent
- Approvals obtained at Sembcorp Marine and Sembcorp Industries EGMs.
- Shares trade ex-rights 13 August 2020.
- Continue to see multiple headwinds for the company.
Shareholder approvals obtained for rights issue and de-merger
- With the approval of the rights issue and de-merger of Sembcorp Marine (SGX:S51) from Sembcorp Industries (SGX:U96) at both EGMs this morning, we update our fair value estimate to the rights-adjusted number of S$0.25 which was also mentioned in our 16 July report: Sembcorp Marine - OCBC Investment 2020-07-16: Impacted By Covid-19.
- Sembcorp Marine’s stock will trade ex-rights on 13 August 2020.
Sank further into the red in 1H20
- In Sembcorp Marine’s recent 1H20 results release, the group reported a 41% y-o-y drop in revenue to S$906m and suffered a net loss of S$192m compared to a net loss of S$6.8m in 1H19. This was mainly due to COVID-19 delaying execution of projects, higher costs recognized for rigs and floaters and specialized shipbuilding projects, and lower margin recognition from offshore platforms. This was partially offset by profit from repairs and upgrades and government grants related to COVID-19.
- Sembcorp Marine’s CEO has volunteered a 50% pay cut, while senior management will take a 15% salary reduction, middle management 10% and rest of the employees a 5% cut. Those earning less than $1.8k a month will not have any salary reduction.
Losses to continue into foreseeable quarters
- Looking ahead, we believe a recovery is still a long way off, given the challenging environment in the industry. Losses are expected to continue into the foreseeable quarters.
- As there were no significant new contracts secured in 1H20, net order book as at end June stood at S$1.9b. The repairs and upgrading business had outstanding orders for execution worth S$280m. We continue to see multiple headwinds on low order book clarity, high debt and capex requirements.
- 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/
2020-08-11
SGX Stock
Analyst Report
0.25
DOWN
0.470
