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Equity Bottom-Up

We reduce Sembcorp Marine’s, or SMM’s, 2016-18 earnings forecasts by 10%-54% to factor in disappointing third-quarter results. SMM’s cumulative nine-month net profit of SGD 44 million, down 82% year over year, is significantly below our expectation. In particular, SMM reported a third-quarter net loss of SGD 22 million, mainly due to higher foreign exchange loss as well as a higher share of losses from Cosco Shipyard Group.We cut our fair value estimate to SGD 0.95 from SGD 1.08, but we see no change to SMM’s narrow moat rating, given its proprietary knowledge in high-specification vessel design and its efficient scale. Our fair value estimate  implies a 2016 price/book ratio of 0.75 times, which we think is fair, taking into account the challenging outlook  for the offshore and marine, or O&amp;M, sector, along with concerns regarding further impairment losses.Analyst: John Hu &amp; Chokwai Lee

We reduce Sembcorp Marine’s, or SMM’s, 2016-18 earnings forecasts by 10%-54% to factor in disappointing third-quarter results. SMM’s cumulative nine-month net profit of SGD 44 million, down 82% year over year, is significantly below our expectation. In particular, SMM reported a third-quarter net loss of SGD 22 million, mainly due to higher foreign exchange loss as well as a higher share of losses from Cosco Shipyard Group.We cut our fair value estimate to SGD 0.95 from SGD 1.08, but we see no change to SMM’s narrow moat rating, given its proprietary knowledge in high-specification vessel design and its efficient scale. Our fair value estimate  implies a 2016 price/book ratio of 0.75 times, which we think is fair, taking into account the challenging outlook  for the offshore and marine, or O&amp;M, sector, along with concerns regarding further impairment losses.Analyst: John Hu &amp; Chokwai Lee

SembCorp Marine's Q3 Disappoints; Fair Value Estimate Cut

Seatrium

SembCorp Marine's Q3 Disappoints; Fair Value Estimate Cut