TheBearProwl is going short on SembMarine Corp. TheBoringInvestor has also previously given his take on whether Keppel Corp will buy over SembMarine Corp.

Disclaimer: this is not an enticement to invest. DYODD. Caveat Emptor.

Any content should not be relied upon as advice or construed as providing recommendations of any kind.

Following up from the short initiation on Sembcorp Marine (SMM:SP) on 15 Jul 2019 at $1.42 with an intrinsic value of $0.70, we now explain the rationale in greater detail. SMM is currently trading at $1.18 which represents a Price to Book ratio of 1.07.

Investment Thesis #1 – Business underperformance

In 1H19, SMM recorded $1.5b of revenue as compared to $2.8b in 1H18. This was due to a significantly lower revenue from the Rigs & Floaters and offshore platform segments. The Company also recorded higher finance costs due to increased borrowings that was secured in 4Q18.

#2 – Low