Seatrium    Last:0.091   -

Collapsing margins

At yesterday's closing price of 3.44, my estimate of FY 06 PE is 25X. Now, at 3.32, foreward 06 PE is about 24X.

The company's 3Q results comfirms my earlier belief that SCM @ current levels is abit too pricey.

 

Big fall on this stock today. Anyone can advise is it a good buy at 3.32.

 

A potential break upwards may soon occur? The bollinger bands are tight and there're signs of some accumulation going on.

 

Finally, an oil rig contract after several months.



SembCorp Marine Ltd said its unit PPL Shipyard has secured a rig building contract worth 155 mln usd from Offshore Group Corp.



The deal entails the construction of a Baker Marine Pacific Class 375 deep drilling offshore jack-up rig. Construction will start in December this year and will be up for delivery in July 2009. "The construction contract is an option that PPL Shipyard granted to Offshore Group in 2005 and which the latter has now decided to exercise given the current buoyant offshore market conditions and the strong demand for such proven high performance and high specification jack-up rigs," said Ong Tian Khiam, Managing Director of PPL Shipyard.

 

1 more reson to be vested in Sembcorp Marine...

News from Rigzone....rumours that award for P57 FPSO will be due on 2nd Nov.... 

Brazil's federal energy company Petrobras (NYSE: PBR) plans to receive on October 24 offers from shipbuilders for the P-55 semi-submersible platform, news service Agencia Estado reported.

The 180,000b/d-capacity P-55 is due to start producing oil at the deepwater Roncador field in the Campos basin in 2011, according to Petrobras.

The company has been delaying the competition in order to answer questions from potential bidders, the news service said.

P-55 is one of two production units that Petrobras is tendering this year. The second is the 180,000b/d-capacity P-57 floating production, storage and offloading vessel (FPSO).

P-57 will operate in Campos' deepwater Jubarte field, starting commercial operations in 2010.

Two groups have shown firm interest in bidding for P-57: a group led by Maua Jurong, the local unit of Singapore's Jurong shipyard, and Brazilian engineering firm Camargo Correa.

 

This will be an interesting stock for this week;

1) SEMBCORP MARINE'S PPL SHIPYARD SECURES US$155 MILLION RIG BUILDING CONTRACT .

2) Semb Marine 30% own Cosco reported good earnings + upgrade from research houses.

3) Semb Marine announcing results on 2nd Nov.

 

SembMar seem to be on the 5th wave up with resistance at $3.95 by December 2006.

 

Don't trust any analysts..... but your own analysis.

I see a possible short term uptrend now.  

 

UBS has a target price of $4.02. CSFB has a target price of $2.07.



So you decide which analyst you trust.

 

Order flow has been weak this year, with no new rigs for the order book since mid-Apr. 2Q06 orders were only about 25% of 2Q05 level and YTD orders are running at only about 60% of last year's level. The net order book has been shrinking.



It also trades at roughly double the multiples of the big American drillers that buy rigs and are therefore driven by the same cycle - more or less. FY07 PER is 15.7x, compared to established American drillers on mid-single-digit multiples of '07 earnings and even lower cash flow multiples.



CSFB has an underperform rating and a target price of $2.07.



It is only a minority investor in the Brazilian shipyard that won the gas production platform contract in Jul, and CSFB is not particularly optimistic about the profitability of that contract.

 

Goldman Sachs believes the positive merits of the robust multi-year offshore upcycle has largely been priced in. It's downgrading SembMar to neutral with a price target of $3.54.



GS valuation assumed:
1) New orders will stay strong and substain at high levels till 09.
2) Strong margin expansion owing to better rig building profitability.

 

The EGM to approve the acquisition of SMOE and SemBeth as well as the acquisition of a further 5% stake in Cosco (from Temasek) will take place tomorrow.

 

The wave sentiments are normally caused by people selling when they reach a profit point resulting in a correction, but in the decline, people refuse to sell the stock to cheaply and people willing to sell will be exhausted, causing people who want to buy to bid higher (resulting in the wave going up again). Same thing repeats, but if the close at the low point is lower than the support offered by the uptrend line, then it could be an indication of a possible change in trend. Like in this case I mention before (just my opinion) , the price did not close below 3.36, it may just be a correction and uptrend continues. Anyway, the candle yesterday did resemble a hammer (bullish indicator), though of course it is not at the bottom of a down trend but just a correction so it may not be very accurate too. My bet is still that this stock will continue to go on the uptrend.at least for the week. (just my opinion from the analysis, for I may be wrong). Long term wise, I think this company has good fundamentals. 

 

Thank you sporeguy. Although I dont fully understand, at least now I  roughly know what it means. Xie Xie....

 

In a bull market, generally there will be 5 waves : 1st wave is (price moving) upward, 2nd wave is (price moving) downward (the lowest point will be higher than the lowest point of the 1st wave), the 3rd wave is upward again (the highest point is higher than the highest point of 1st wave), the 4th wave is downward again with the support at the highest point of first wave and finally the 5th wave will reach the highest point.

Then it will have 3 wave for the downward trend : 1st wave down, 2nd wave up and 3rd wave down again.

Then the cycle will continue depending on market situation.

In a bear market, it is the reverse :

5 waves for downward trend : 1st wave down, 2nd wave up, 3rd wave down further, 4th wave up and 5th wave down the furthest.

3 waves for upward : 1st wave up, 2nd wave down and 3rd wave up (the resistance being at the lowest point of the 1st wave of the 5 waves downward trend).

 

I read the term "4th wave"   and "5th wave"... May I know what does these mean huh ? Can someone please help to elaborate in layman term for newbies like me.  Thank you.

 

SembMar seems to have completed the 4th wave, anytime it will starts its journey on the 5th wave.

 

Hi Lawrencechoo,

I think this stock is on a downtrend. Yah, I know it rose today... but that's what I read from the charts. Lets wait a few days to see what happens.

 

Singaporegal, you mean uptrend or downtrend?

 

Hi singaporegal,

Thanks for the confirmation.

Apprec if you can review my TA comment on SPC thread posted 21 Aug 0746hrs.

Thanks