Sembcorp Marine's new Tuas yard predicted to boost cost savings to 20%

How will margins benefit?

According to Barclays, Sembcorp Marine’s CEO, Mr Wong Weng Sun, presented at the annual Offshore Technology Conference on ‘The development of the next-generation yard’, in reference to the opening of the company’s new Tuas yard in Singapore.

Mr Wong believes the new efficiencies the yard can achieve could bring about cost savings of up to 20%.

Here's more from Barclays:

We believe this could provide some positive support to Sembcorp Marine’s margins in 2014.

However, lower margin recognition from its deepwater units and the increased competition from regional yards could dampen investor sentiment, so we maintain our EW rating. We prefer Keppel Corp (OW; PT S$13.8) for its more robust margin outlook and more attractive valuation (c12x 2013 P/E).