Daiwa downgrades Sembcorp Marine, cuts Keppel target

Daiwa Capital Markets has downgraded oil-rig builder Sembcorp Marine to hold from outperform and cut its target price to S$3.81 from S$6.05.

The brokerage also lowered its target price for Keppel Corp to S$10.24 from S$13.69 and kept its outperform rating.
Daiwa said the rig building sector is likely to derate due to the increased likelihood of a recession, but Sembcorp Marine's outlook is less positive than Keppel's as the former faces greater earnings risk due to its lower order book.
Keppel has an order book of S$9.1 billion compared with S$5.6 billion for Sembcorp Marine, but Daiwa has lowered its 2012-2013 earnings per share estimates for Keppel by 1-6 per cent to reflect lower forecasts for property income and order wins.
At 0240 GMT, shares of Keppel were 1.6 per cent lower at S$8.60, and have fallen 16.4 per cent since the start of the year.
Sembcorp Marine shares were 1.5 per cent lower at S$3.89, and have lost about 28 per cent since the beginning of the year