For sinking SembMarine, 2015 is much worse than the 2008 crisis

There’s no end in sight for its current troubles.

When it rains, it pours for Singapore’s second-largest rig builder. The past couple of weeks show that 2015 will likely be an even tougher year for Sembcorp Marine compared to the Global Financial Crisis of 2008, after a series of bad news caused SMM’s share price to crash to an unprecedented low.

RHB Research highlighted that SMM is now trading at levels below the counter’s 2008 trough. The stock has lost over a quarter of its value in just six weeks, and RHB cautions that there may be more pain in store for the rig builder.

Brazil poses the largest risk for SMM, as it makes up around 47% of the group’s orderbook. Meanwhile, its new yard has failed to live up to expectations, dragged by weak ship repair revenues and lacklustre customer demand.

“The deep fundamental issues are unlikely to be resolved within 2016. Investors are turning more cautious on it too, given its limited disclosure and transparency,” RHB said.

“Investors may find more comfort in peer Keppel Corp for its operational diversification. An improvement to SembMarine’s corporate disclosures may also encourage the return of investors’ interest,” RHB added.