Brokers' take

Published Mon, Jul 31, 2017 · 09:50 PM

Sembcorp Marine | Reduce Target price: S$1.55 July 31 close: S$1.685 Phillip Securities Research, July 31

SEMBCORP Marine's cost-cutting measures will enable the group to alleviate the pressure from the weak operating environment in the near term. However, we believe it will take time for the group to replenish the order book as well as get more work flows coming in. The weak performance may continue into H2 2017.

We revise down the FY17 estimated earnings per share from the previous 6.6 Singapore cents to 5.4 Singapore cents, due to weaker-than-expected performance in H1 2017. Based on updated blended forward 12-month price-earnings ratio of 28.5 times, we derive an updated target price of S$1.55 (previous target price: S$1.58). This implies a downside of 8.6 per cent from the last done price of S$1.695, and we downgrade our call from "neutral" to "reduce".

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