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. 

You may also be interested in:

You have no rights to post comments


We have 781 guests and no members online

rss_2 NextInsight - Latest News