Sembcorp's new ship yard fails to push repair revenues up big time

Revenue crept up a tad 1% to $158m.

According to OCBC, Sembcorp Marine (SMM) posted a 27% YoY rise in revenue to S$1.34b and a 3% increase in net profit to S$122.48m in 1Q14, both accounting for about 20% of our full year estimates.

Here's more from OCBC:

We judge this to be largely in line with expectations, mainly due to the lumpy nature of revenue recognition in rigbuilding (revenue +33% YoY, -33% QoQ) which accounted for 60% of total turnover in the quarter.

Group operating margin at 11.1% was similar to that in 4Q13, but lower than the 13.7% registered in 1Q13.

In 1Q14, ship repair revenue saw a mere 1% YoY increase in ship repair revenue to S$158m in the quarter (-3% QoQ) despite the opening of the new integrated yard at the end of last year.

As such, we pare our revenue estimates for this segment by ~19% to S$771m for FY14. However, this only has a small impact on our group revenue estimates (drops by ~3%), as ship repair accounts for about 12% of total revenue.

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