Brokers' take

Sembcorp Marine | Neutral (downgraded) July 31 close: S$1.35 Target price: S$1.59 KGI Securities, July 31

Sembcorp Marine's Q2 performance was a clear disappointment, with full-year guidance of a loss similar to last year's loss of around S$74 million. Furthermore, order wins have been significantly weaker than expected.

SembMarine's net gearing remains elevated at 1.4 times as at end Q2, a level which we think raises the probability of a rights issue in the next 6-12 months.

The investigations surrounding SembMarine's Brazil operations may continue to be an overhang on its share price. In the worst-case scenario, should SembMarine be fined US$422 million - the amount that Keppel Corp was fined in 2017 - our fair value for the …