Check out why Sembcorp Marine might just strike it lucky

Disappointing 29% PATMI is seeing hope.

According to Nomura, a robust order book worth SGD12.1bn provides earnings visibility in a tougher operating environment marked by intensifying competition among rig builders.

Here's more from Nomura:

SMM’s 9M12 results disappointed with PATMI down 29% y-y to SGD371mn on lower revenue recognition and forex loss of SGD14.8mn. Though EBIT margins improved on q-q basis to 14.1% from 13.1% in 2Q12, the pace of revenue booking was slower than our as well as consensus expectations.

EBIT margins coming in above our estimates of 12%/12.3% for FY13/14F will be a key positive as will be additional new orders, especially for accommodation semi-subs (3 options from Prosafe) and FPSO topside modules. We believe semi-sub new orders can stage a recovery in 2013.

SMM is currently trading at FY13/14F P/Es of 17.2x/15.2x, with P/B at 3.1x/2.8x, in the mid-range of the historical trading band of 8-28x for P/E and 1.5-4.5x for P/B. Average FY12-14F ROE stands at 23% while FY13F dividend yield is attractive at 4.2%.

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