SMM’s share price has fallen by 15.1% since we downgraded it to Hold a few months ago in our report “Looking beyond FY11”, 24 Feb 2012.  This compares with the STI’s 6.9% drop over the same period. At current price levels, we see value emerging in SMM’s stock. With an expected upside potential of 14.8% (excl dividends) now, we upgrade our rating to BUY with an unchanged fair value estimate of S$5.12.Sembcorp Marine has a net order book of S$7.4b with deliveries stretching till 2Q15, and this provides good earnings visibility at a time when uncertainties are still prevalent in the global economy and there is a general lack of clarity in terms of corporate earnings outlook. The group has secured orders worth about S$3b YTD, accounting for 34% of our full year estimate which includes orders from Petrobras.