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Broker's Take: Jefferies cuts Sembmarine's target price on challenging macro-outlook

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JEFFERIES kept its "hold" rating and lowered its target price on Sembcorp Marine to S$4.10 from S$4.40, following the company clinching a US$696 million conversion order on Monday - PHOTO: SEMBCORP MARINE

JEFFERIES kept its "hold" rating and lowered its target price on Sembcorp Marine to S$4.10 from S$4.40, following the company clinching a US$696 million conversion order on Monday.

"With this order win, Sembmarine's year-to-date order book stands at S$3.7 billion, within range of our S$4.5 billion estimate for 2014.

"The macro-environment for new order wins, however, remains challenging with falling oil prices, delays in exploration and production spend and slow progress in awarding long-term charters for semis/drillships," analyst Abhijit Attavar said.

He is trimming his 2015 forecast earnings for Sembmarine by about 9 per cent on lower margin assumptions. He also cut his target price on the stock because he expects execution uncertainties and a challenging macro-outlook to act as an overhang on Sembmarine's share price.

At 12.30pm, Sembmarine was trading at S$3.71, up seven Singapore cents or 1.9 per cent.