Sembcorp Marine rebound in 4Q13 should restore confidence in stock

Glowing prospects should relieve battered stock price.

Sembcorp Marine's stock may experience a positive reversal what with the rebound in margins in 4Q13 which is expected to continue through to the rest of 2014, according to DBS Equity Research.

"SMM is a purer play in the offshore & marine sector with stronger EPS CAGR of 15% in FY13-15F. We believe this set of results, margin recovery and on-schedule Brazilian projects should restore confidence in the stock," said DBS.

"Stock price has been under pressure after four quarters of disappointing results. We expect higher revenue contribution from SMM’s proprietary Pacific Class design, shiprepair segment (from 25% to 30% of group revenue) and recognition of back-loaded profit from project completions in 2H14 should drive margin recovery in FY14," DBS added.

The research firm said industry fundamentals are intact and continued strong enquiries across all three types of drilling rigs should translate to a good flow of order wins ahead for Sembcorp Marine.