CAPPING A DISASTROUS END TO 2019

Sembcorp Marine announced its 4Q19 results before the market opens on 20 February. The company incurred 4Q19 losses of S$77.7m, bringing full-year 2019 losses to S$137m. We previously expected full-year 2019 losses to be in the region of S$100-110m. We believe the main reason why losses came in significantly more-than-expected is due to the slowing revenue recognition profile of the company this quarter. 4Q19 revenue slowed to a pace of only S$623m compared to an average of S$750m for 9M19. The reduction in revenue, coupled with the company’s persistently high fixed costs resulted in gross losses of S$72m in the current quarter alone. We believe that the revenue outlook for the company remains dim, with the company now expected to book quarterly revenue in the region of S$600m. This figure could potentially be lower if new order wins remain elusive....