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Hot stock: SembMarine down more than 6% as Q4 results disappoint

SHARES of Sembcorp Marine sank more than 6 per cent after market opened on Thursday.

This was after the rig-builder reported a net loss of S$33.8 million for the fourth quarter ended Dec 31, a reversal from the S$34.3 million net profit the year before - missing analysts' estimates by a wide margin.

As at 9.30am on Thursday, the stock traded at S$2.47, down 6.1 per cent or 16 Singapore cents from Wednesday's close of S$2.63.

CIMB analyst Lim Siew Khee said that SembMarine's poor fourth-quarter performance came as "a surprise", with the net loss higher than forecast.

She added that SembMarine may have incurred S$80 million of "kitchen sinking costs", though buffered by a write-back of S$32 million for the sale of nine jack-up rigs to Borr Drilling.

Still, Ms Lim maintained an "add" call on the stock, raising the target price to S$3.01, citing a possible corporate action by SembMarine's parent Sembcorp Industries, and higher-than-expected order wins.

Low Pei Han, analyst at OCBC, said that all eyes will be on Sembcorp Industries when it announces results on Friday morning as the market looks for an update on the group's ongoing strategic review.

The strategic review has given rise to speculation over a potential privatisation or divestment of SembMarine by Sembcorp Industries.

DBS analyst Ho Pei Hwa kept a "buy" call on the stock, though with a lower target price of S$2.90. She noted that SembMarine is "a key proxy to the recovery in the oil and gas and offshore and marine sectors, with strong order wins as key re-rating catalyst".