Sembcorp Marine stock slides further
Singapore
CONCERNS over Sembcorp Marine's lack of new orders and heightened exposure to troubled Brazilian rig owner Sete Brasil weighed down its stock on Tuesday, a day after the group announced worse-than-expected earnings for January through March.
The counter fell seven cents to S$2.94 on 5.9 million shares traded. This came after its nine-cent slide to S$3.01 on Monday before its first-quarter results were released, though that drop was partly because it went ex-dividend on Monday for a dividend of eight cents.
Analysts said in reports on Tuesday that Sembcorp Marine's management had refused to talk about whether it had received requests for it to defer its rig deliveries. The amount that Sete Brasil owes the group has also ballooned over the past two months.
OCBC Investment Research analyst Low Pei Han said in a note that Sembcorp Marine was "still in a relatively good position" with its S$10.6 billion net order book, but estimated that about S$4.5 billion of that was related to Sete Brasil's drillship orders. Sete Brasil is a subsidiary of Brazil's state oil company Petrobras, which announced a massive US$17 billion writedown last week and remains the world's most indebted energy company with about US$135 billion in debt.
Analysts noted on Tuesday that Sete Brasil now owes Sembcorp Marine about S$160 million for the drillships. This sum is double the S$70 million to S$80 million figure the group had announced in February this year.
Ms Low added: "Given that Keppel Corp has received requests from customers for deferments in rig deliveries, it would be a surprise if Sembcorp Marine has not received any." She has a "hold" call on the stock with a fair value of S$2.77.
KGI Fraser analyst Joel Ng called a "sell" with a 12-month target price of S$2.567, saying in a note that Sembcorp Marine may see orders cancelled "given that their customers have weaker balance sheets compared with peers like Keppel. Major customers like Oro Negro and Hercules Offshore are already facing difficulties in financing".
Of the 11 analysts who updated their calls on Monday or Tuesday, only two rated the stock a buy - Nomura and Macquarie. Nomura, which has a S$4.07 target price, said in a note that rig orders could come in from the fourth quarter onwards due to "aggressive global rig attritions".
