Sembcorp Marine’s share price dips 10% as oil cost fears intensify

Coupled with escalating concerns over its new drillship.

Sembcorp Marine’s shareholders shouldn’t throw in the towel yet, even if the company’s share price has fallen drastically by about 10% since early September.

OCBC notes that about half of this drop happened just in the last five trading days, as investors remain jittery over weaker oil prices, as well as worries over execution risks for its new drillship. 

The report also states that the recent sell-down is overdone, as its drillship unit has already left Singapore for Brazil in spite of a six-month delay, and is still on track for delivery in June next year.

“ While acknowledging these risks, we point out that execution risk of this unit may actually be lower now with a greater percentage of the construction work being done in Singapore instead of the new Brazil yard – at least 70% of the unit has been completed. We also would not be surprised if SMM has built in a buffer or a grace period, since this is a new product for the group,” noted OCBC.