Brokers' take

Singapore offshore and marine | Overweight Credit Suisse, July 18

DESPITE market concerns of further earnings cuts with low new orders year-to-date, we believe there could be some green shoots in the Q2-2017 results. Also, we expect interim dividends to be largely maintained, suggesting that the worst might be over.

We expect Keppel to show improving cash flow in Q2-2017, driven by US$275 million of downpayment collected from the sale of five jackups to Borr Drilling. O&M profit is also likely to be slightly boosted from the gain on the sale of Keppel Verolme for 23.5 million euros (S$39.5 million). Sembcorp Industries' utilities division is likely to see an improvement in profit particularly in India. We expect Sembcorp Marine's operating margin to improve from 1.8 per cent in Q1-2017, which was impacted by costs pending finalisation with a customer. However, net gearing is likely to remain high pending payment collection for the Cosco sale. Yangzijiang's shipbuilding gross margin is likely to remain healthy at above 20 per cent.