by winston » Thu May 22, 2008 2:55 pm
From DBS:-
Direct offshore play
Story: Petrobras plans to spend US$112bn up till 2012 to increase its oil and gas production, refining and distribution operations. This follows the recent discovery of 5bn to 8bn billion-barrel Tupi field, which is the largest offshore oilfield discovery in 30 years.
Specifically, Petrobras plans to order worth US$30bn of 40 oil drilling ships and drill platforms for delivery by 2017.
Point: While SembCorp Marine’s (SMM) y-t-d order wins of S$403m is lower than expected, we expect the group to be one of the leading contenders for the anticipated jobs from Petrobras, due to the presence of its joint venture yard in Brazil, and the existing strong business relationship with the Brazilian company.
We expect this to help add to SMM’s current outstanding order book of
S$6.6bn. We also believe that there are orders from other clients that are close to SMM. These are likely to be made up of semi-submersible, jackups, fixed platforms and FPSOs.
Indeed, before the big discovery in Tupi field, we believe that Petrobras is already looking to place an order for the P-62, a clone of P-54, worth US$900m to US$1bn in contract value. Hence, based on enquiries and projected demand for offshore equipment, we expect order wins for this year to pick up momentum.
There are no change to our earnings estimates, which stay at S$441m in FY08 and S$512m in FY09. Our assumptions of S$4bn in order wins for 2008 and 2009 are maintained for now.
Relevance: We have raised our fair value to S$4.85, mainly due to the upgrade to 20x FY09 PE for offshore construction (vs. 18x previously). Maintain Buy.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"