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Big guns giving full support for this Co.
How not to prosper?
SembMarine opens integrated yard at Tuas
Group to consolidate all shipyards here into single facility by 2024, boosting productivity
Seeing the big picture: PM Lee viewing a model of the Sembmarine Integrated Yard at Tuas he says that the integrated yard will help the company optimise its layout and facilities there while freeing up the land it is occupying elsewhere for redevelopment
[SINGAPORE] A new chapter in Singapore's maritime development was written yesterday when Prime Minister Lee Hsien Loong opened Sembcorp Marine's new integrated yard, which will eventually consolidate the group's shipyards across the island into a single facility.
Speaking at the grand opening of the Sembmarine Integrated Yard, Mr Lee said that the plan was to consolidate all of Sembcorp Marine's yards here by 2024, with the aim of creating a " Shipyard of the Future" that will boost productivity significantly.
For starters, Mr Lee said that the integrated yard will help the company optimise its layout and facilities there while freeing up the land it is occupying elsewhere for redevelopment.
" It includes a one-stop solutions hub for ship repair & conversion, shipbuilding, rig building and offshore engineering & construction," he said, adding that the new facility will leverage on modern production technologies and processes to help double output.
Why go down ar? Result no good meh?
Secured upgrading works for an 115,875 grt passenger ship, Diamond Princess, from Princess Cruises, a brand under Carnival Corporation. The pleased customer of a recent retrofitting project for another passenger vessel, Sun Princess, has also came on board Sembcorp Marine's long-term favoured customer contract, which will see further dockings by Princess Cruises at the group's Sembawang shipyard going forward. Princess Cruises currently has a fleet of 17 passenger vessels. Bloomberg consensus estimates SMM?s 12-month TP at $5.00, implying a 11% upside from its last close.
The offshores were trading flat yesterday despite facing selling pressure during the day.
Kepcorp failed to break its resistance at 10.85 level and it started to retrace slightly yesterday. It had tested its immediate support at 10.70 level and it held well, forming long lower shadow. This indicates that the support level at 10.70 level will hold if there is further retracement.
Sembcorp also attempted to retrace towards its support at 5.12 level and the support held well. It will likely to consolidate further at this support or will attempt to test its resistance at 5.20 level today.
Sembmar had also tested its immediate support level of 4.54 level and held firmly. This support level will continue to hold Sembmar today and rebound attempts will be likely to happen. If rebound is being confirmed, Sembmar will be able to test its immediate resistance level at 4.60 level.
Overall, the offshores are likely to continue to trade mixed today as they will likely to consolidate further before rebound can occur.
SMM: Held an analyst site tour for its new Tuas yard facility, which has been operational since 5 Aug.
Mgt updated on the yard?s progress and reiterated the strategic rationale behind developing the yard.
The 73ha yard is equipped with 4 VLCC dry docks and total capacity of 1.55m DWT, and quay space of more than 3.8km.
It is expected to significantly enhance SMM?s capabilities by alleviating logistical issues faced at the older yard and contributing to reduced dependence on foreign labor on account of efficiency improvements.
It will also free capacity for rig building activities at the old yards.
Mgt previously guided for doubling of repair revenue from the current run-rate of $600-700m pa to $1.1-1.2b pa.
With EBIT margins above 20%+ levels, this could provide a decent uplift to earnings next yr.
Additionally, incremental capacity and faster turnarounds will likely result in higher conversions revenue as well.
Nomura keeps at Buy with TP$5.20.
CIMB keeps at Outperform with TP $4.80. Says stay invested on expectations of stronger 2H13 earnings, with margin upside from the execution of higher value contracts and repeat designs.
The new integrated yard will sharpen SMM?s competitiveness in the long run. The amalgamation of all ship repair and conversion work at this new yard will free capacity and increase productivity for rig-building activities at the old yards.
During the shipyard tour for analysts today, we observed that all four dry docks were occupied with repair work. We expect ship repair revenue to increase by c.50% from S$642m in FY12 (c.14% of SMM?s revenue) to c.S$1bn in FY14. There are no changes to our FY13-15 EPS and target price (14x CY14 P/E, 10% below the O& M industry?s mid-cycle). Maintain Outperform, with catalysts from stronger margins and orders.
We visited phase 1 of SMM?s new integrated yard in Tuas, West Singapore today. The yard started operations in Aug 2013. The 73ha yard is equipped with four very large crude carrier (VLCC) dry docks, with total capacity of 1.55m DWT and quay space of more than 3.8km. The new yard will nearly double SMM?s current repair, conversion and offshore capacity of 1.9m DWT.
The estimated current utilisation rate of the yard is about 70%, with all four dry docks occupied with repair jobs. More ships are expected to be progressively rerouted to the yard from Pulau Samulun (Jurong Shipyard?s main repair facility). Phase 2 of SMM?s integrated yard (34.5ha) will take another four to five years to develop.
Total capex for phase 1 was about S$900m, which is higher than the original target of S$750m as certain building works (such as the dormitory) were brought forward.
What We Think
Given the keen competition from China and Korea, we think that SMM will sharpen its rig-building capabilities by consolidating its repair, conversion and offshore work at this new yard and better utilise its existing yards for rig-building. The new yard?s deeper quay (15m) (vs. the old Jurong yard?s 9m) allows SMM to take on semi-sub repair and work that requires thruster installation. SMM also expects to lower its logistics cost as repair work will be consolidated at one yard, ensuring faster turnaround. One of the dry docks is also able to house large 18,000TEU container ships.
What You Should Do
Stay invested. We expect stronger 2H13 earnings, with margin upside from the execution of higher-value contracts and repeat designs.
(Read Report)
SOURCE: CIMB
Sembcorp Marine's new Tuas yard predicted to double repair capacity
More ships will also be rerouted.
CIMB analysts visited phase 1 of SMM?s new integrated yard in Tuas, West Singapore today.
The yard started operations in Aug 2013. The 73ha yard is equipped with four very large crude carrier (VLCC) dry docks, with total capacity of 1.55m DWT and quay space of more than 3.8km.
Here's more from CIMB's site visit:
The new yard will nearly double SMM?s current repair, conversion and offshore capacity of 1.9m DWT. The estimated current utilisation rate of the yard is about 70%, with all four dry docks occupied with repair jobs.
More ships are expected to be progressively rerouted to the yard from Pulau Samulun (Jurong Shipyard?s main repair facility).
Phase 2 of SMM?s integrated yard (34.5ha) will take another four to five years to develop. Total capex for phase 1 was about S$900m, which is higher than the original target of S$750m as certain building works (such as the dormitory) were brought forward.
Here's how Sembcorp Marine plans to beat Korean, Chinese rivals
Rig building capabilities to be ramped up.
According to CIMB, given the keen competition from China and Korea, it thinks that Sembcorp Marine will sharpen its rig building capabilities by consolidating its repair, conversion and offshore work at this new yard and better utilise its existing yards for rig-building.
Here's more:
The new yard?s deeper quay (15m) (vs. the old Jurong yard?s 9m) allows SMM to take on semi-sub repair and work that requires thruster installation.
SMM also expects to lower its logistics cost as repair work will be consolidated at one yard, ensuring faster turnaround. One of the dry docks is also able to house large 18,000TEU containerships.
During the shipyard tour for analysts today, we observed that all four dry docks were occupied with repair work. We expect ship repair revenue to increase by c.50% from S$642m in FY12 (c.14% of SMM?s revenue) to c.S$1bn in FY14.
There are no changes to our FY13-15 EPS and target price (14x CY14 P/E, 10% below the O& M industry?s mid-cycle).
What Happened
We visited phase 1 of SMM?s new integrated yard in Tuas, West Singapore today. The yard started operations in Aug 2013.
The 73ha yard is equipped with four very large crude carrier (VLCC) dry docks, with total capacity of 1.55m DWT and quay space of more than 3.8km.
The new yard will nearly double SMM?s current repair, conversion and offshore capacity of 1.9m DWT. The estimated current utilisation rate ofthe yard is about 70%, with all four dry docks occupied with repair jobs.
More ships are expected to be progressively rerouted to the yard from Pulau Samulun (Jurong Shipyard?s main repair facility).
Phase2 of SMM?s integrated yard (34.5ha) will take another four to five years to develop. Total capex for phase 1 was about S$900m, which is higher than the original target of S$750m as certain building works (such as the dormitory) were brought forward.
It may be small, but our island has the distinction of being one of the busiest ports in the world. A ship arrives or docks every three minutes with more than 60,000 containers loaded or unloaded every day.
What?s more, Singapore is a thriving international centre for shipbuilding, ship repairs and a global leader in the building of jack-up rigs.
One Singaporean company at the forefront of this industry is Sembcorp Marine (SGX: S51). The company is the marine and offshore engineering arm of Sembcorp Industries (SGX: U96) and provides a wide range of services across the entire value chain, from ship repair and upgrade services to specialised shipbuilding, tanker conversion and offshore and marine engineering. Sembcorp Marine is also a global leader in rig building.
The company was founded in 1963, as the Jurong Shipyard Limited, changing its name to Sembcorp Marine Ltd in 2000.
The company has a global network spanning six hubs in Singapore, China, India, Brazil, the Middle East, UK and the USA and employs over 10k people.
But did you know?
- Sembcorp Marine is one of the two biggest oil-rig makers in the world ? the other being another Singapore-based company ? Keppel Corporation (SGX: BN4).
- Sembcorp Marine?s shares have jumped six-fold over the last decade while the Straits Times Index (SGX: ^STI) only managed to double in the same time period.
- Sembcorp Marine started life as Jurong Shipyard Ltd ? a joint venture between the Government of Singapore and Ishikawajima Harima Heavy Industries Co. Ltd of Japan.
Sembcorp Marine has recently announced that it has signed a contract with the US based Helix Energy Solutions Group for the construction of a semisubmersible well intervention vessel. Indeed, with a proven track record and 50 years of experience, Sembcorp Marine will always be in a powerful position to win projects from smaller companies.
But with competition from rival Keppel Corporation for offshore rig orders, as well as yards in Korea and China it will certainly be kept on its toes.
The offshores were facing some selling pressure yesterday as they are mostly facing resistance level.
Kepcorp had managed to test its resistance at 10.70 level but it did not manage to break it. Bearish candle was formed yesterday and it is now facing the risk of a retracement towards its support level at 10.55 level.
Sembcorp failed to trade higher than 5.10 level yesterday and it starts to retrace yesterday. This will likely to indicate a retracement action towards its support of 5.02 level before attempting to head higher again.
Sembmar also faced similar movements yesterday. It nearly tested its resistance level at 4.55 and it started to retrace during the day. Although it managed to make gains at closing, Sembmar still ended its day with a black candle which might trigger a retracement movement today its support at 4.45 level.
Overall, the offshores are now facing resistance levels which they might be attempting to test it again if the sentiment turns out to be positive today.
Support: $4.567
the immediate support for descending REVERSAL..
Sembcorp Marine ST: rebound expected.
Update on supports and resistances.
Pivot: 4.15
Our preference: Long positions above 4.15 with targets @ 4.57 & 4.7 in extension.
Alternative scenario: Below 4.15 look for further downside with 4 & 3.8 as targets.
Comment: the RSI broke above a declining trend line.
Key levels
4.85
4.7
4.57
4.4 last
4.15
4
3.8
Copyright 1999 - 2013 TRADING CENTRAL
recapped !! !!
chart nexus S& R
R1 : $4.57
R2 : $4.78
S1 : $4.39
S2 : $4.28
4-traders.com S& R
R1 : $4.57
R2 : $4.73
S1 : $4.47
S2 : $4.38
http://www.chartnexus.com/software/software_cnx_download1.php#disp
* free support and resistance level for stock chart.
* Click HELP to upgrade for latest version 4.1, release date 14.09.2013
chartnexus has resolve the error of two free S& R level for stock chart, however it only provide one free S& R level for stock chart.
Any one having the same problem or I'm the only person?
Chart of the Day: Singapore shipyards bask in 89% jump in newbuild deals
Is the worst finally over?
According to DBS, while it is too early to call for a full sector turnaround, they believe the worst is over.
With oversupply still an issue for both shipping and shipyards, the brighter spot is now in demand, where DBS sees early signs of recovery, in line with a brighter macro backdrop in the US and Europe.
Here's more from DBS:
While we expect the recovery path to be a long and bumpy one, we observed early signs of recovery, led by contract awards.
Industry orders for vessels surged 89% y-o-y to 73m dwt in 8M13, and looks set to surpass 2011?s 84m dwt.
Enquiry levels at the yards are strong, and we could expect more orders to flow through in the coming months as the financially sound shipping companies take advantage of the low newbuild prices, incentivized by recent spike in BDI.
Why Sembcorp Marine is well poised for more unit deals with Helix
Could the joint design be the reason?
According to DBS, Sembcorp Marine (SMM)?s Jurong Shipyard has secured a contract to build a second Semi-submersible Well Intervention Rig at US$346m for Helix Energy Solutions, a market leader in subsea well intervention services.
This is SMM's second specialised platform with well intervention and subsea capabilities.
Here's more from DBS:
The contract price is 10% lower than the first one (US$385.5m) secured in Mar-2012, as it is a smaller unit.
While the first unit is built based on Bassoe Technology's naval architectural design, the second one will be based on a design jointly developed by SMM's R& D arm - Sembcorp Marine Technology Pte Ltd, and Helix.
With the joint design, we believe SMM is poised to secure more of such units from Helix in the future.
Sembcorp Marine's 2013 order win projected to hit a whopping $4.5b
Thanks to recent hety deals.
According to DMG Research, Helix places USD346m order for semisub well intervention rig. The latest order from Helix lifted SMM?s YTD order wins to SGD3.93bn.
" We estimate its net orderbook at SGD14.8bn, with deliveries extending up to 2019. This is the second well intervention rig Helix is ordering from SMM," DMG Research said.
Here's more from DMG Research:
The DP3 semisub, to be named Q7000, is based on a design jointly developed by SMM and Helix. It is scheduled for delivery in mid-2016.
As SMM?s new order is likely to beat our initial expectation of SGD4.0bn for 2013, we raise our order win forecast to SGD4.5bn, which accordingly results in a 4% upward revision in our FY15F EPS.
The start of operation of SMM?s new yard in Tuas will add significant capacity to the group and drive the next level of productivity gains. The new yard will carry out repair works while the Jurong shipyard will focus on newbuilds.
3 compelling reasons for buying into Singapore rig builders
Despite rising competiing and earnings risks.
OSK-DMG has upgraded to Overweight Singapore's rig builders, which have underperformed the STI due to concerns over rising competition and consensus earnings downgrades.
The research firm has turned positive on the sector due to the potential recovery in shipbuilding orders and the fact that tightening credit may ease competition for offshore orders. There is also the risk of EPS downgrades declines. Finally, valuations look appealing leading into the FY14 earnings.
Here's the full analysis from OSK-DMG:
We upgrade to OVERWEIGHT Singapore?s rig builders, which have underperformed the STI due to concerns over rising competition and consensus earnings downgrades. We turn positive as: i) the potential recovery in shipbuilding orders and tightening credit may ease competition for offshore orders, ii) the risk of EPS downgrades declines, and iii) valuations look appealing as we roll forward to FY14 earnings. We prefer SMM over KEP and SCI.
Return of ship orders could ease competition. Data from Clarksons indicate that newbuild prices and new orders are improving. We are of the view that the revival of shipbuilding orders will divert the attention of South Korean and Chinese mega yards toward seeking ship orders rather than offshore orders, thus bringing some relief to the intense competition in the offshore market.
Tighter yard capacity could boost pricing power. Dalian Shipyard has secured orders for nine jackup YTD, of which eight are from Seadrill and one from PT Apexindo. These are due to be delivered between 2Q15 and 3Q16. We believe Dalian has largely filled its near-term slots. As other Chinese yards jostle to win the confidence of blue chip customers and credit conditions imposed on the weaker yards tighten, we believe the pricing power of Singapore shipyards may improve.
Lower risk of EPS estimates downgrades after huge cuts. We previously argued that street EPS expectations for FY13 and FY14 had been too bullish and may lead to downward revisions. Since Nov 2012, consensus has cut EPS estimates for KEP, SMM and SCI by 5%, 23% and 13% respectively. As we believe the earnings downgrades for rig builders are close to the bottom, their downside risks are now lower.
Positive earnings pace heading into FY14. Rig builders saw earnings decline in 1H13 as operating margins normalised. We expect their earnings momentum to swing back to positive growth in FY14.
Prefer SMM over KEP and SCI. We believe SMM (BUY, TP: SGD5.60) is a more leveraged play to the positive outlook. The key risks to our view are: i) expansion in rig building capacity by Chinese state-owned yards, ii) a steep drop in crude oil prices, and iii) execution risks in Brazil.
