Sembcorp Marine - CGS-CIMB Research 2022-06-14: Defence Contract Confirmed

Sembcorp Marine - Defence Contract Confirmed

  • Sembcorp Marine (SGX:S51) secured an Engineering, Procurement, and Construction (EPC) contract worth US$150m (~S$200m) from Emgepron, a state-owned company linked to the Ministry of Defence in Brazil. The contract is based on typical contract payment scheme.
  • The vessel will be constructed in Sembcorp Marine’s yard in Brazil, commencing in 1Q23 with scheduled completion in 3Q25.
  • Recall that Sembcorp Marine secured repair jobs for three US Navy vessels in 1Q22. We think that establishing an expertise in defence may give it a competitive edge against its Korean competitors, and may thus command higher margins.
  • We believe this EPC contract raises Sembcorp Marine’s current net orderbook to S$1.95bn, from S$1.75bn in 1Q22.
  • Reiterate HOLD and target price of S$0.09 for Sembcorp Marine. We base our target price on 0.8x FY22F P/BV (3-year historical average). We see potential for discount to narrow post-merger completion of Keppel Corp (SGX:BN4) & Sembcorp Marine in 4Q22 as Sembcorp Marine can ride on Keppel O&M’s order wins.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LIM Siew Khee CGS-CIMB Research | Izabella TAN CGS-CIMB Research | 2022-06-14
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.090 SAME 0.090

Previous report by CGS-CIMB:
2022-05-18 Sembcorp Marine - Clearing Headwinds

Target prices by 2 other brokers at Sembcorp Marine Target Prices.
Listing of broker reports at Sembcorp Marine Analyst Report.

Relevant links:
Sembcorp Marine Share Price History,
Sembcorp Marine Announcements,
Sembcorp Marine Dividends & Corp Actions,
Sembcorp Marine News Articles


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