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Tradeable Idea Of The Week: Sembcorp Marine & Biosensors
Tradeable, Tradeable Ideas | 06 June 2013
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By: Raymond Leung
Articles (142) Profile

Tradeable Ideas is a new weekly column by Tradeable. This column focuses on locally listed companies or particular sectors that have attracted strong interest from analysts at various research houses. Tradeable Ideas is meant to serve as a springboard for investor’s interest in specific stocks or sectors in Singapore.

Sembcorp Marine
Last week, Sembcorp Marine (SMM) secured two contracts for jack-up rigs through its subsidiaries (Jurong Shipyard and PPL Shipyard). The contract wins have affirmed the group’s leadership in the offshore drilling sector. Jurong Shipyard secured a US$596 million contract for a newbuild ultra-high specification jack-up rig from Noble Corporation (not linked to locally listed Noble Group) while PPL Shipyard secured a US$220.5 million contract for a high-specification jack-up rig from BOT Lease. The two contracts will be an addition to the strong order book of SMM standing at $13.6 billion as at 21 February 2013 with completion and deliveries stretching till 2019.

According to OSK Research, SMM has won $2.43 billion worth of contracts since the beginning of 2013, making up 60 percent of their 2013 projection of $4 billion and estimates that they have a net orderbook of $14.7 billion. Analysts from Barclays expect the company to win further orders as Maersk Drilling and Statoil may look for further ultra-high-specification jack-up rigs. Based on seven analysts which gave Sembcorp Marine three “Buy” calls and four “Hold” calls, the company has an average upside of 13.4 percent.

Source: Factset, Sembcorp Marine 1-Month Return

Biosensors International Group
Biosensors International Group (BIG) announced their results for FY2013 and at the same time, declared its maiden dividend since its listing on SGX in 2005. The dividend of US$0.02 will translate to approximately a 31 percent payout ratio and 2.1 percent yield based on the last price of $1.17.

BIG faces a tougher business environment as its profit decreased by 68 percent to $115.4 million in FY2013 from $364.3 million of FY2012. This came despite a revenue increase of 32 percent and a higher profit margin for product at 81 percent; the decrease in royalty of 29 percent is the main reason for the decline of profits. According to research from Maybank Kim Eng, new product lines such BioMatrix NeoFlex and contributions from the recent acquisition of Spectrum Dynamics could sustain a decent growth rate but they think that a stronger catalyst is needed for positive re-rating. Maybank Kim Eng reiterated their “Hold” rating with a target price of $1.25 while the average upside of BIG is 31.2 percent given by 4 different analysts.

Source: Factset, Biosensors 1-Month Return

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Trained in fund management, Raymond is familiar with shares and various investment vehicles.

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Sembcorp Marine  1.260 -- --   
Business: Co is a leading global marine & offshore engineering group. [FY18 Turnover] rigs & floaters, repairs & upgrades, offshore platforms (98.8%), ship chartering (1%), others activities (0.2%).

Insight: May-19, 1Q19 revenue fell 31.3% to $810.6m due to ... Read More

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