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Its net profit excluding non-operating items for the last quarter dropped 29% to $126 million compared with the year-earlier period, while the full-year figure was down 29% at $500 million from 2011.

The group’s operating profit was cut by 26% to $148 million for the fourth quarter and by 25% for the full year to $554 million as higher costs outweighed a 38% quarterly rise in turnover to $1.38 billion and a 12% yearly increase to $4.43 billion.

The higher turnover was attributed to greater revenue recognition from offshore platform projects as well as more rig-building work in the latest quarter, including a drillship and three jack-ups.

Sembcorp Marine, with a net order book of $13.6 billion and work stretching into 2019, is confident of continued strong demand for rig newbuilds due to the need for fleet renewal and focus by operators on the need for more advanced units for harsh environments.

The fabrication group, which runs the Sembawang, Jurong, PPL and SMOE yards, is expanding its capacity, with the first phase of its integrated Tuas facility in Singapore set to be ready for operations later this year while construction work recently started on its first yard offshoot in Brazil, Estaleiro Jurong Aracruz.

Sembcorp Marine Makes Progress on New Yards

Sembcorp Marine in 2009 unveiled plans to develop a modern, work-efficient and integrated New Yard Facility to position the Group for sustainable growth and expansion of its marine and offshore businesses. Integrated Tuas New Yard, Singapore Sembcorp Marine’s Phase I of the Integrated New Yard Facility, which spans 73.3 hectares, is on track to be commercially operational in the second half of 2013.

Equipped with leading-edge technology, the new yard will be capable of servicing a wide range of vessels, including VLCCs, new generations of mega containerships, LNG carriers and passenger ships. It will also be geared to meet the stringent safety and quality requirements of vessels and to comply with new regulatory and environmental standards.

Estaleiro Jurong Aracruz, Brazil

Construction work on Estaleiro Jurong Aracruz, Sembcorp Marine’s first overseas Integrated New Yard Facility in Brazil, has commenced. The 82.5-hectare wholly-owned locally incorporated shipyard, which broke ground in December 2011, is scheduled for completion by end 2014.

Planned shipyard facilities include a 120m x 380m drydock, a one-kilometer berthing quay as well as ancillary piping facilities and steel fabrication workshops. Well-positioned to serve Brazil’s vibrant offshore and marine sector, Estaleiro Jurong Aracruz will have capabilities to undertake construction of drillships, semi-submersible and jackup rigs, platforms, supply vessels, the integration of FPSOs and topside modules fabrication, in addition to the traditional activities of drilling rig repairs, ship repairs and modification/upgrade works.

Traffic

Map

Satellite

Shipbuilding Tribune Staff, February 21, 2013

dividends = 6 cents + 2 cents.

Net profit in the final quarter of 2012 at rigbuilder Sembcorp Marine fell 27 per cent to S$167 million from S$229 million in the same period last year.

The decline was steeper after excluding non-operating items, with Q4 bottom line down 29 per cent at S$126 million from S$177 million.

Revenue during the final quarter rose 38 per cent to S$1.38 billion, from S$998 million a year earlier.

Last year, the Singapore-based rigbuilder landed a record S$11 billion worth of orders, helped by a raft of orders for drillships and floating platform modules for Petrobras worth US$6.3 billion (S$7.82 billion).

SembCorp Industries: SCB has earnings preview.

House saw a maintenance shutdown weaker marine masked robust utilities performance in 2012. Estimate Sembcorp Industries (SCI) 4Q12 net profit will be down 24% YoY, at $190m.

Forecast earnings from Sembcorp Marine (SMM) will fall 28% YoY and utilities profit will be down 24% YoY.

4Q12 utilities earnings factor in the impact of maintenance shutdown at its Jurong Island power plant in Dec12.

For FY12E, forecast SCI‟ s net profit to be 9% lower at $739m, dragged by weak marine performance (SMM FY12E down 32%).

However, utilities‟ earnings will be up 18% YoY, driven by robust performance in its key SG market.

The offshores were trading flat yesterday as they are facing resistance. Kepcorp continues to be reluctant to trade higher yesterday as it continues to consolidate at breakout level of 11.65. It will likely to continue to consolidate unless it manages to break its high of 11.74 level.

Sembcorp continues to stay above its 20ma support line yesterday despite breaking it previously. Hence, Sembcorp is still maintaining its uptrend momentum but it now requires a stronger upside breakout in order to continue the uptrend momentum. Its support at 5.45 level held well but its resistance at 5.58 level will be a challenge for Sembcorp to break it currently.

Sembmar continues to be resisted by the 200ma resistance line at 4.73 level yesterday. Its attempt to break this resistance level failed as sellers sold down its strong opening.

Overall, the offshores will continue to be lacking of bullish vibe as they are lacking of catalyst to trade higher.

Hovering at 4.70 now and its financial result will be out today after trading hours. Expected to give around 20 cents of dividend.

Results may not be good looking at the trade history now.... Smiley

The offshores were mostly showing bullishness yesterday as they continue to attempt to rebound.

Sembcorp lead the rebound as it attempted to rebound back into its consolidation range between 5.45 – 5.58 levels. Bullish signals are being triggered and Sembcorp will likely to attempt to trade towards the 5.58 resistance level.

Sembmar also managed to gain a bit of bullish vibe yesterday. It had attempted to break the MA resistance level at 4.73 level during the day but it ended up being resisted and close as a white shooting star. This shows that this resistance level is still firmly preventing Sembmar’s upside momentum.

Kepcorp started to retrace yesterday after it to continue to trade higher. It had retraced back to its breakout level of 11.65 and tested it. Kepcorp will likely to continue to do retracement action today before it can continue its uptrend movement.

Overall, the offshores does still have bullish strength to reach their immediate resistance levels.

SMM is expected to achieve initial recognition for the first Sete Brasil drillship in 4Q12, contributing to their expectation of higher revenue for the quarter.

Concurrently, up to 4 jackups and 2 semis are due to reach initial recognition stage within the 2 quarters, providing further boost to the topline.

House anticipate operating margins of about 15.3% in 4Q12, and overall FY12F operating margins would then be about 13.9%.

Maybank also expect final and special dividends of 15¢/share, bringing full-year dividends to 20¢/share.

Sembcorp Marine:

Barclays: reiterate O/w, TP $6.20 from $6.50.

Note that SMM to report results on 21 Feb, expect margins in the top quartile of peers, estimate an adjusted NP of $548mn, down 20% YoY.

Its operating profit was affected by the lower-priced contracts signed in late 2010 and early 2011, and the downtime in some jack-up projects.

Despite that, believe the co is on track to deliver a top-quartile margin of c14% relative to its rig/ship-building peer group.

Trim 2012E-16E EPS by 4% pa on average lowering TP to $6.20.

SembCorp Marine has secured an LOI for an EPC contract

of the Process, Drilling, and Quarters Platform Topsides

from Det norske oljeselskap ASA, worth about S$900m.

Construction is expected to commence in December

2013, with completion in March 2016. This order is

SMM’s maiden win for FY13, for which we have assumed

order wins of S$5bn for the full year.

latest $900m win revenue recognition will b in 2014...margin will continue to be squeezed

Long lead timefor latest win (CIMB)

The latest S$900m platform contract may not contribute significantly in the near term given the long lead time forconstruction and delivery. The share price upside is limited as current valuations appear rich at 14x CY14, close to the offshore & marine’s mid-cycle of 15x.

Maintain Neutral.We keep our EPS and target price, still based on 15x CY14P/E orits 10-year average. The current order fallswithin our S$4.5bn expectationfor 2013. We see potential re-rating catalysts coming from stronger-than-expected margins and order wins.

What Happened

Sembmarine’s SMOE secured a S$900m letter of intent from Norwegian Det norske oljeselkap ASA for an EPC contract to build an offshore platform integrated topside for the North Sea Norwegian sector. For this project, SMOE will work with its engineering partner, Wood Group Mustang.Construction will start in Dec 13,with completion expected in Mar 16.

What We Think

We believe material revenue recognition will only start after 1H14,given the long lead time forconstruction and delivery. We estimate the EBIT margin for the contract to be about 10%. The latestcontract value is much larger than theS$600m contract secured by SMOE in Jul 11 from PTTEP for an integrated processing and living quarters platform. It is also almostdouble the value ofits previous Norwegian Ekofisk accommodation topside secured in Mar 10 at S$550m. We believe there could be some revenue sharing withMustangfor the latestcontract.

Our S$4.5bn target is 35% above Sembmarine’s 2012 non-Brazilian contracts amounting to S$3.3bn. Sembmarine has outstanding options worth aboutUS$1.5bn, including three semi-subaccommodation units (US$295m each),and four modules and modules integration for a FPSOfor Petrobras (estimated at US$675m).With the latestNorwegian contract in the bag, Sembmarine needs another S$3.6bn to meet our target.

What You Should Do

The share price will react positively to this news.However,current valuations are not compelling in light of thedeclining margins and earnings deterioration in FY13.

Sembcorp Marine – UOBKH has a Technical SELL with +7.8% potential return... ...

The offshores continues to trade lower yesterday as they are starting to form a high.

Kepcorp is now starting to retrace and it managed to test its immediate support level at 11.40 yesterday. Its long lower shadow formation is an encouraging sign that shows that the support is holding firmly. Kepcorp will likely to continue to test this support level today.

Sembcorp managed to test its 20ma support line and held well. It is now ready to form its higher low to continue its uptrend formation.

Sembmar failed to follow its counterparts yesterday. Its sideways support at 4.70 level failed to hold as support and Sembmar retraced lower to test its 50ma support at 4.63 level. It held well but 4.70 is going to be a strong resistance level which Sembmar might have trouble breaking it. Its current uptrend status might have changed to downtrend if Sembmar is unable to return above 4.70 in this few days.

Overall, the offshores might still face selling pressure today and their support levels will be tested again.

[Trading Central] Sembcorp Marine: further upside.

04 Feb 2013 09:24

Update on supports and resistances.

Short Term View
(Rise, Limited Rise, Consolidation, Limited Decline, Decline) Limited Rise

Change In Short Term View None

Medium Term View
(Bullish, Range, Bearish) Range

Change In Medium Term View None

Pivot: 4.5

Our preference: Long positions above 4.5 with targets @ 4.95 & 5.2 in extension.

Alternative scenario: Below 4.5 look for further downside with 4.3 & 4.1 as targets.

Comment: the RSI lacks downward momentum.

Key levels
5.45
5.2
4.95
4.78 last
4.5
4.3
4.1

Copyright 1999 - 2013 TRADING CENTRAL

The offshores were also unable to keep their positiveness yesterday and start to show retracement movements.

Kepcorp retraced strongly and formed a long black candle which can be seen as one black crow pattern. If Kepcorp is to close lower than 11.50 level today, it will likely to retrace towards its support of 11.30 level.

Sembcorp continued its retracement movement yesterday and managed to get closer to its support at 5.38 level. With its 20ma support line at 5.40 level, Sembcorp will likely to continue to attempt to test this support level.

Sembmar failed to maintain its support above 20ma line yesterday. It is now likely to test its horizontal support at 4.70 level and it must hold in order to maintain its uptrend status. If it fails to hold, Sembmar might retrace to 4.60 level.

Overall, the offshores are still in danger of retracement before they can reach their support levels.

SINGAPORE : Singapore rigbuilders Keppel Offshore & Marine (O& M) and Sembcorp Marine have secured a slew of contracts this year.

Analysts have said the two companies could see another strong set of orders in 2013, driven by robust demand for ultra-deepwater rigs.

Keppel O& M booked about US$8 billion worth of contracts this year - its second highest on record.

This follows a record S$10 billion worth of contracts which Keppel O& M secured in 2011.

Keppel O& M said over 65 per cent (US$5.36 billion) of the orders in 2012 came from Brazil.

Looking ahead, Keppel said it is developing a new product that will enable drilling in deeper and harsher environments.

Tong Chong Heong, chief executive officer of Keppel Offshore & Marine, said: " There are also new frontiers, new areas where more rigs are required, and with the emergence of areas such as the Caspian, Black Sea, Mexico and many parts of Southeast Asia, demand for rigs has gone up."

Keppel O& M along with Sembcorp Marine are big players in the offshore rig building industry, accounting for some 70 per cent of the global market share for jack-up rigs.

Analysts said the growing demand for ultra-deepwater drilling vessels and equipment will continue to support business growth.

Low Pei Han, investment analyst at OCBC Investment Research, said: " O& M companies have seen very good order books, Keppel and Sembcorp Marine each secured about 10 billion dollars worth of orders this year. About 50 per cent of each came from Sete Brasil and Petrobras, which is what the market had more or less anticipated.

" Going into 2013, we expect Sete Brasil and Petrobras orders to remain about the same level as this year, which will be about S$4 billion to S$5 billion."

But the Singapore rigbuilders are likely to face stiffer competition from Korean and Chinese companies.

Analysts said some Chinese shipbuilders are offering similar products at a 20 per cent discount.

For example, earlier this month, Yangzijiang secured a US$170 million order for a jack-up rig, while a similar contract at Keppel O& M cost US$205 million.

According to the China Association of the National Shipbuilding Industry, China hopes to capture 20 per cent of the global market for rigs, production facilities and offshore products by 2015.

But some analysts said Singapore rig builders are not likely to lose their competitive edge anytime soon.

Janice Chua, head of equity research (Singapore) at DBS Vickers, said: " It is a tall order for the Chinese yards to try and get the global market share for rigs.

" In order for the Chinese yards to have a bigger market share globally, what is more important is the soft skills of project management, engineering, design expertise, as well as ensuring that they can deliver the projects on time and according to the clients specification. That will take at least three years to build for any of these offshore structures."

Increasing shale gas production in the US could also present a new competitive landscape for rigbuilders.

Jason Waldie, associate director at Douglas Westwood, said: " The wild card here is whether the US is going to export, or how much the US is going to export.

" Certainly I know the US government is planning to export a very good share of its gas to the market. Now what impact does that have for the yards?"

Analysts expect the demand for rigs to come under some pressure should the US decide to export a substantial amount of shale gas.

- CNA/ms

Sembcorp Marine ST: bullish bias above 4.5.

Trading Central | 2013-01-21 01:21:00

Update on supports and resistances.

Pivot: 4.5

Our preference: Long positions above 4.5 with targets @ 4.95 & 5.2 in extension.

Alternative scenario: Below 4.5 look for further downside with 4.3 & 4.1 as targets.

Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Key levels
5.45
5.2
4.95
4.72 last
4.5
4.3
4.1

Copyright 1999 - 2013 TRADING CENTRAL

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Sembmarine

Sembcorp Marine sees profits drop