Singapore shares drifted lower ahead of the U.S. presidential election, dragged by Sembcorp Marine after the rig builder’s third-quarter earnings came below expectation, triggering broker downgrades or cuts in target prices.
The Straits Times Index was down 0.2% at 3,024.48 points, while MSCI index of Asia-Pacific shares outside Japan was 0.2% higher.
Sembcorp shares plunged as much as 7.7% to the lowest since June 12. It was the most actively traded stock by value in the Singapore market.
Sembcorp reported a net profit of $115.5 million for its third quarter ended September, down from $222.5 million a year earlier, mainly due to lower recognition of revenue from its rig building projects.
DMG & Partners Securities said the revenue was sharply lower as the third quarter last year included "lumpy" recognition from its Songa Eclipse rig project. Revenue from only one jack-up rig was recognised in the third quarter of 2012, the broker noted.
DMG downgraded its rating to ‘neutral’ from ‘buy’ and cut its target price to $4.61 from $5.70, citing lower earnings and rising competition for Sembcorp’s shipyard operations.
CIMB Research said it expects a stronger fourth quarter as more projects will reach initial recognition. But it noted Sembcorp‘s management had lowered its long-term margin target to 10-13% from 14-15%.
It downgraded Sembcorp stock to ‘neutral’ and reduced its target price to $5.01 from $5.85.
OCBC Investment Research cut its target price to $5.84 from $6.09. But it said the company’s longer-term outlook remains intact and maintained ‘buy’ rating.
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