Excerpts from Deutsche Bank report

City Development (Buy; CMP: SGD8.85) has been one of the best performing stocks in Singapore this year. After the 18% share price rally in City Development (vs. FSSTI: -1.3%), we believe Sembcorp Marine (SMM) would provide better upside potential.

400 semi subA semi-submersible oil rig built by SembCorp Marine a few years ago. Photo: CompanyOur conversations with investors suggest offshore and marine (O&M) is an under-owned sector. Hence, we replace City Development with SMM in our top buy list (TP SGD1.95).

SMM shares have seen heavy selling amid falling crude oil prices since mid-2014. We see limited downside risks now, as:

(1) majority of its order book has delivery dates in the next 2-3 years when oil prices should be stronger; reducing deferment/impairment risks; and
(2) bulk of its order book exposure is not in the oversupplied shallow water space.

SMM also has greater expertise in the deepwater space (drill-ships and semi-subs) from an order book perspective among Singapore O&M peers, and this reinforces our view that deepwater remains a long-term growth story.

We retain ComfortDelGro (TP SGD3.51), DBS Group (TP SGD19.8), First Resources (TP SGD2) and SingTel (TP SGD4.6) in our top picks list. 

Full report here. 

Share Prices

Counter NameLastChange
AEM Holdings1.3000.020
AusGroup0.022-
Avi-Tech Electronics0.345-
Best World Int.1.360-
CEI0.950-
China Sunsine1.140-
CNMC GoldMine0.2650.005
CSE Global0.470-
Eagle HTrust USD0.655-0.005
Food Empire0.515-
Golden Energy0.169-
GSS Energy0.071-
ISDN Holdings0.215-
ISOTeam0.225-0.005
JB Foods0.660-
KSH Holdings0.445-0.005
Miyoshi0.032-0.003
Moya Asia0.0640.001
Nordic Group0.270-
Oxley Holdings0.3250.010
Procurri0.3700.005
REX International0.0960.003
Riverstone0.980-
Roxy-Pacific0.375-
Sing Holdings0.385-
SingMedical0.310-
Straco Corp.0.7250.005
Sunningdale Tech1.200-
Sunpower Group0.480-
The Trendlines0.087-0.002
Tiong Seng0.200-
Uni-Asia Group0.715-
Yangzijiang Shipbldg0.9700.030

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