SembCorp Marine

Sembcorp Marine posted 1Q 2018 gross profit of $43 million and operating profit of $20 million. Net profit for the quarter was $5.3 million, compared with $37 million in 1Q 2017 (restated for accounting changes on adoption of SFRS (I)).

 The decrease was mainly due to the one-off gain on disposal of Cosco Shipyard Co., Ltd recorded in 1Q 2017; lower contributions from Offshore Platforms; offset by higher profit recognition on rigs delivery in 1Q 2018 on adoption of SFRS(I) 15.

Excluding the effects on the adoption of SFRS(I) 15, net loss for 1Q 2018 would have been $33 million.

Looking through their 1Q2018 reuslt, Net profit is down 86% to $5.3m,.

NAV of $1.157.

EPS is down 86% to 0.25 cents versus 1.77 cents .

PE is rather high at current price of $2.08 that is a PE of 46x ( estimated full year PE of 4.5 cents).
The current price of $2.08 is running ahead of its financial fundamentals.

 Net debt remained stable, with net debt to equity at 1.14 times as at 31 March 2018 compared with 1.13 times as at end FY2017. Cash flow from operating activities (before working capital changes) was $67 million in 1Q 2018. Cash generated from operations was $31 million, mainly due to working capital for ongoing projects, offset by receipts from ongoing and completed projects Outlook Global exploration and production (E&P) spending trend continue to improve due to firmer oil prices in the first quarter of 2018.

However, recovery in rig orders is expected to take some time as most of the drilling segments remain oversupplied, with day rates and utilisation under pressure. The offshore production segment has improved with the FID of several projects.

We continue to respond to an encouraging pipeline of enquiries and tenders for innovative engineering solutions. Repairs and upgrades business is increasingly competitive, although demand for LNG carriers and cruise ships remains strong.

Regulations on ballast water treatment requirements coming into force in the foreseeable future will further underpin the potential of this segment. However, the offshore segment for upgrades and repairs remains weak.

  The overall industry outlook remains challenging. Despite improvement in E&P CAPEX spending outlook, it will take some time for this to translate into new orders. Margins remain compressed with intensifying competition. Based on existing orders, overall business volume and activity is expected to remain low, and the trend of negative operating profit may continue. We continue to actively manage our costs to align with business volume. We continue to prudently manage our cash flows through securing projects with milestone progress payments to minimise working capital requirements.

Sembcorp Marine will continue to actively pursue the conversion of enquiries into new orders, execute existing orders efficiently and position itself well for the industry recovery.

TA wise, looks rather bearish!

Breaking down of $2.06 may see it sliding further down towards testing $1.88 price level with extension to 1.76.

Not a call to buy or sell.

Please do your own due diligence.

 Sembcorp Marine Ltd, an investment holding company, provides offshore and marine engineering solutions worldwide. The company engages in the turnkey design, engineering, procurement, construction, and commissioning of offshore newbuilding and conversions, FSOs, FPSOs, FDPSOs, FPUs, MOPUs, gas terminals, FLNGs, FSRUs, jack-ups, semi-submersibles, drill ships, SSP solutions, TLPs, and SPARs. It also engages in the repair, refurbishment, retrofitting, life-extension, upgrading, and conversion of vessels, marine and offshore structures, LNG and LPG gas carriers, cruise ships, ferries, mega-yachts, floating production vessels, MODUs, tankers, containers, and cargo ships, as well as offers jumboization and dejumboization solutions. In addition, the company offers afloat and emergency repair, underwater cleaning and repair, main engine maintenance and repair, steel and pipe work, electrical and instrumentation repair, mechanical and motor rewind repair, tank cleaning, sludge and oily waste disposal, staging work, hydro jetting and hydro/vacuum blasting, riding crew and voyage repair, specialized workshop repair and reconditioning, vessel towage and port clearance arrangement, specialists service and navigation, automation, safety, and fire protection services. Further, it offers offshore platform solutions, such as integrated process; production, riser, and drilling; wellhead, power generation, manifold, and accommodation platforms; and wind-farm substations, as well as topside modules fabrication, installation, and integration. Additionally, it designs and builds sophisticated, specialized, gas value chain, ferry, RoPax, cruise, renewable energy and offshore support, naval support and security, and research and scientific survey vessels. The company was formerly known as Jurong Shipyard Ltd and changed its name to Sembcorp Marine Ltd in 2000. The company was founded in 1963 and is headquartered in Singapore. Sembcorp Marine Ltd. is a subsidiary of Sembcorp Industries Ltd.