Seatrium Limited (formerly SembCorp Marine and KOM)

[LLS]

currently trading at 13 times earnings only
net cash position

I think its pretty cheap for a blue chip

attached is report from ocbc
  Semb Marine OCBC.pdf (Size: 343.05 KB / Downloads: 24)

[opmi]

currently trading at 13 times earnings only
net cash position

I think its pretty cheap for a blue chip

attached is report from ocbc

net cash? net unencumbered cash?

[LLS]

Sorry i dont get what u mean

[CityFarmer]

currently trading at 13 times earnings only
net cash position

I think its pretty cheap for a blue chip

attached is report from ocbc

net cash? net unencumbered cash?

Interest-bearing debt, isn't the only tool to leveraging-up.

The current ratio of the company is slightly less than 1.2, which is considered low. Further into the AR2013 balance sheet, most liabilities are in trade payable and progress billing in excess of work-in-progress(?).

In AR2013
Trade and Other payable : 1781 million
Excess-ed Progress billing : 1441 million
ST Debt : 166 million
Total Liabilities : 4441 million

Inventories and work-in-progress : 2084 million
Receivables : 442 million
Cash : 1695 million

In short, the company has substantially piled up payables, and charged "excess-ed billing", while half of current assets were still in inventories and work-in-progress.

We should do a further look into the cash flow statement, especially on FCF to further analyse the company.

(not vested)

[LLS]

ocbc research

Sembcorp Marine: Secures US$696m FPSO conversion contract

Sembcorp Marine (SMM) announced this morning that it has secured a US$696m contract to convert a shuttle tanker into a FPSO vessel for OOGTK Libra GmbH & Co KG, a JV between Brazil’s Odebrecht Oil & Gas and Teekay Offshore. Scheduled for completion in 3Q16, the FPSO is expected to be chartered to Petrobras for work for about 12 years in the Libra field in the ultra-deepwater section of Brazil’s Santos basin. Brazil has been a major driving force behind FPSO demand and SMM is well-positioned to service this segment. With this latest contract win, SMM has secured about S$3.6b worth of work YTD, accounting for ~90% of our full-year new orders forecast. Maintain BUY on SMM with S$4.18 fair value estimate. (Low Pei Han)

[greengiraffe]

http://www.businesstimes.com.sg/companie...m-contract

Sembmarine's Jurong Shipyard wins US$696m contract
Deal comes from a joint venture between Brazil's Odebrecht Oil & Gas and Teekay Offshore

By
Joyce Hooijoyceh@sph.com.sg@JoyceHooiBT
BT_20141014_JHSEMB14_1317432.jpg The latest deal brings the value of Sembmarine's new contracts secured year-to-date to S$3.7 billion. PHOTO: BLOOMBERG
14 Oct5:50 AM
Singapore

JURONG Shipyard, a wholly owned subsidiary of Sembcorp Marine (Sembmarine), has won a US$696 million deal to convert a shuttle tanker into a floating, production, storage and offloading (FPSO) vessel for OOGTK Libra GmbH & Co KG - a joint venture between Brazil's Odebrecht

[CityFarmer]

Analyst update on the company, after the recent order...

(not vested)

--------
Sembcorp Marine (SembMarine) secured a contract worth USD240m to
build a Pacific Class 400 jack-up rig for Bank of Tokyo-Mitsubishi UFJ,
with Japan Drilling Co (JDC) as the lessor and operator of the asset. Its
YTD order wins are SGD4.2bn, on track to meet our target of SGD4.5bn.
Valuations of 11-13x FY14-16F P/E on trough earnings appear attractive.
Maintain BUY with SGD4.50TP based on SOP (a 24.3% upside).
...
http://remisiers.org/cms_images/research...Marine.pdf

[greengiraffe]

http://www.businesstimes.com.sg/companie...8-to-s132m

Sembmarine's Q3 profit rises 1.8% to S$132m
Despite low oil price environment, group believes long-term fundamentals driving E&P market remain stable

By
Nisha Ramchandaninishar@sph.com.sg@Nisha_BT
6 Nov5:50 AM
Singapore

RIG-BUILDER Sembcorp Marine reported a 1.8 per cent increase in net profit to S$132 million for the third quarter ended Sept 30 on the back of higher profit contribution from rig-building and fixed-platform segments.

Turnover rose 3.2 per cent to S$1.71 billion due to

[weijian]

Transocean has been a significant customer to the Sporean rig builders, with Keppel FELS securing 5 jackups and Jurong Shipyard securing 2 drillships orders from them in the last 1 year. This includes options for another 5 jackups and 3 drillships respectively. Looking at how things are heading towards a "perfect storm" (as AlphaQuant coined in another thread), there is a good chance these options will not be taken up.

On a seperate note, it is an open secret that SCM secured its drillship orders at 5:95 payment terms in Feb2014 this year. Would be a real downer if Transocean decides to walk away?

(vested in SCM)

Transocean Takes $2.76 Billion Charge Amid Rig Glut

Transocean Ltd. (RIG), owner of the biggest fleet of deep-water drilling rigs, is feeling the effect of an industrywide glut in the expensive vessels just as crude-oil prices tumble.

The company will delay posting third-quarter results after saying earnings would be hit by $2.76 billion in charges from a decline in the value of its contracts-drilling business and a drop in rig-use fees. Shares in the Vernier, Switzerland-based company, which pushed back the release of its earnings report to Monday instead of today, fell 0.7 percent to $29.71 at the close in New York.

Oil’s decline to a four-year low in recent months has caused companies to consider spending cuts, which would further reduce demand for rigs and the rates Transocean can charge to lease them to explorers. The drop in prices comes after rig contractors responded to rising demand during the past few years with the biggest batch of construction orders for rigs since the advent of deep-water drilling in the 1970s.

“Ouch,” analysts from Tudor Pickering Holt & Co. wrote in a note to investors today. The announcement “reflects the reality of this oversupplied floater rig market globally.”

Other rig owners may also face writedowns, Waqar Syed, an analyst at Goldman Sachs Group Inc., wrote today in a note to investors. Among those that may be affected are Diamond Offshore Drilling Inc., Noble Corp., Ensco Plc, Rowan Cos. and Atwood Oceanics Inc., he wrote.

http://www.bloomberg.com/news/2014-11-07...harge.html

[CityFarmer]

I post the article here, since SembCorp Marine has the most impact. Deepwater outlook is affected by lower oil price, but shallow-water one remains active.

A $2.65 TP seems too pessimistic on the company outlook...

(not vested)

Rig builders in for a rough patch in 2015, says Maybank Kim Eng

SINGAPORE (Nov 20): Keppel Corp ( Financial Dashboard) and Sembcorp Marine ( Financial Dashboard) are unlikely to secure the $9 billion to $11 billion worth of new orders in 2015 expected by investors as oil prices continue to fall, says Maybank Kim Eng.

In a sign on waning demand, recent day rates for deepwater rigs are being renewed at 25% to 40% below the levels in their last contracts, while 86% of the new supply of jack-up rigs have yet to be deployed, according to Maybank Kim Eng Yeak Chee Keong.

"As a result, we expect drillers to defer their new rig orders in 2015," he said in a sector report today.

When concerns about an oversupply of deepwater rigs and international oil companies cutting their capital spending first surfaced at the start of the year, drilling companies believed that sustained high oil prices would "return the market to an equilibrium" within 12 to 18 months, he noted.

Now, however, lower oil prices have foiled hopes for a recovery in 2015, with offshore drillers appearing to be heading into "a perfect storm" of low oil prices, an oversupply of rigs and capital expenditure cuts by oil companies," he said.

"A recovery could now be pushed back to 2016."

Longer term, while the outlook may be positive, drillers are in no hurry to order new rigs, he said.

"This will be negative for Singapore rig builders. With net order books of almost $13 billion each, Keppel and SembMarine may have sufficient orders to last 1.5 to two years.

"But their backlog momentum is ultimately their stock-price drivers. Their stocks are likely to languish on any order misses in 2015. Apart from new-order risks, existing orders with options may lapse or be re-negotiated at lower prices."

Against this backdrop, Maybank Kim Eng has downgraded Sembcorp Marine to "sell" from "hold" and cut its price target from $3.80 to $2.65.
...
http://www.theedgemarkets.com/sg/article...nk-kim-eng