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Broker's take: DBS picks Sembcorp Industries

DBS Vickers recommends a "buy" only on Sembcorp Industries (SCI) among the large-cap offshore plays, citing SCI's stable but undervalued utilities business.

A March 11 research note from the brokerage highlighted Moody's downgrade on six offshore drillers as tightening their access to funds, ushering another wave of deferments and cancellations on rig-building contracts placed with yard groups, Keppel Offshore & Marine and Sembcorp Marine.

Remarking that "the oil price's bounce could be short-lived without any meaningful change in fundamentals", the brokerage recommends "selling into strength for the O&G-related stocks".

It recommends a "buy" on SCI with a target price of S$3.30.

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