CIMB has upgraded its rating on Sembcorp Marine ( Financial Dashboard) to “add” from “neutral”, saying the stock’s 18% year-to-date fall “is overly done”.
One of the main reasons for the decline has been multiple schedule shifts for SembMarine’s first drillship to be sailed off to Brazil, according to CIMB analyst Lim Siew Khee.
“Now that the drillship is finally on its way to Brazil, we believe investors should have less concern about SembMarine’s execution and delivery capability,” Lim said in a note.
“With the drillship finally out of its Jurong yard, we think SembMarine has crossed a new hurdle and could alleviate market fears of further delays.”
Despite upgrading her rating, Lim has cut her price target from $4.30 to $4.11, based on 13.5 times earnings, a 10% discount to the stock’s long-term average of 15 times.
Shares of SembMarine traded at $3.62, up 1.1%, at 0343 GMT.
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