Ship Ahoy: Sembcorp Marine closes in on Keppel's order wins

All thanks to friendlier payment terms.

Keppel could be shaking at the knees and may be starting to throw emergency flares around as Sembcorp Marine starts to seriously narrow the gap between their order wins.

According to their recent report, CIMB said they're not overly concerned about KEP’s lackluster orders YTD. Excluding the options from Transocean and Ensco totalling US$1.3bn, Keppel could be bidding for projects worth US$8bn.

Here's more from CIMB:

The lackluster YTD order win of S$1.9bn may not be alarming as contract flow could be lumpy.

We keep our S$6bn order target for 2014. We are comforted that the payment terms offered to customers thus far have been kept at 20:80.

Strong order wins for SMM but worse terms. SMM’s order pipeline is decent, at US$3bn. Its orders also caught up with KEP recently, at S$1.9bn.

However, easier terms (5:95 and 10:10:80) could be the sweetener given to clients in exchange for contracts. Once a pattern is formed, we think that it is difficult for SMM to revert to the good old days of 20:80, let alone milestone payments.