Sembcorp Marine's 2012 orderbook hit a record high

Non-Brazilian deals alone amounted to $3.3b.

According to CIMB, Sembcorp Marine's latest S$900m platform contract may not contribute significantly in the near term given the long lead time for construction and delivery.

The share price upside is limited as current valuations appear rich at 14x CY14, close to the offshore & marine’s mid-cycle of 15x. The current order falls within S$4.5bn expectation for 2013.

Here's more from CIMB:

We see potential re-rating catalysts coming from stronger-than-expected margins and order wins. Sembmarine’s SMOE secured a S$900m letter of intent from Norwegian Det norske oljeselkap ASA for an EPC contract to build an offshore platform integrated topside for the North Sea Norwegian sector.

For this project, SMOE will work with its engineering partner, Wood Group Mustang. Construction will start in Dec 13, with completion expected in Mar 16.

We believe material revenue recognition will only start after 1H14, given the long lead time for construction and delivery. We estimate the EBIT margin for the contract to be about 10%.

The latest contract value is much larger than the S$600m contract secured by SMOE in Jul 11 from PTTEP for an integrated processing and living quarters platform.

It is also almost double the value of its previous Norwegian Ekofisk accommodation topside secured in Mar 10 at S$550m. We believe there could be some revenue sharing with Mustang for the latest contract.

Our S$4.5bn target is 35% above Sembmarine’s 2012 non-Brazilian contracts amounting to S$3.3bn.

Sembmarine has outstanding options worth about US$1.5bn, including three semi-sub accommodation units (US$295m each), and four modules and modules integration for a FPSO for Petrobras (estimated at US$675m).

With the latest Norwegian contract in the bag, Sembmarine needs another S$3.6bn to meet our target.

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