04 August 11 The Business Times by Mindy Tan
SEMBCORP Marine (Sembmarine), the world's second-biggest maker of oil rigs, fell as much as 25 cents, or 4.72 per cent to $5.05 in line with the market panic yesterday.
The firm on Tuesday posted a 15 per cent drop in second quarter net profit, citing timing of revenue recognition.
The stock closed off its lows at $5.22, down 8 cents. A total of 10.05 million shares changed hands.
The company's second quarter net profit had slumped 15 per cent year-on-year to $149.7 million from $176.1 million as many of Sembmarine's jack-up rig orders booked in Q4 FY10 are still in the planning stages and not yet recognised.
Analysts have remained upbeat, and maintained their 'buy' call.
DBS Vickers maintained its 'buy' call on the stock, and raised its target price (TP) to $6.80.
'The headline numbers show that it is a profit drop of 15 per cent year on year for the second quarter, so people are probably reacting to that,' said DBS Vickers analyst, Janice Chua. 'This is without understanding that this year, earnings are back end loaded, meaning we will see second half recognition for certain projects.'
Citi too maintained its 'buy' call on the stock, confident that their 15 per cent above-consensus FY11E Patmi (profit after tax and minority interest) estimate is achievable despite a slower first half.
It noted: 'In our view, 2H11 is poised to surprise the street (similar to 2H10) on the back of stronger HoH turnover and robust margins. An exceptionally stronger 2H11 is likely with the delivery of a semi-sub Songa Eclipse (resumption of recognition on remaining 70 per cent of US$640 million order value) in 2H11.'
CIMB analyst Lim Siew Khee added: 'Generally, today's markets have not been great; and they were dragged down by Cosco yesterday, so we started from a low base.'
CIMB maintained its 'outperform' call on the stock, and a target price of $6.80.