Sembcorp Marine’s 2022 Net Loss Expected; Merger With Keppel Offshore & Marine Completed

Sembcorp Marine’s, or Sembmarine’s, 2022 net loss of SGD 261 million, a significant improvement from a net loss of SGD 1.17 billion in 2021, was within our expectations. We believe the net loss is well guided by management and that investors will focus on the positive outlook ahead, following completion of the merger with Keppel Offshore & Marine. We expect Sembmarine to be largely break-even in 2023 before posting a higher net profit of SGD 374 million in 2024, on the back of improved activities and larger order book. However, we keep our fair value estimate at SGD 0.12 as the higher earnings derived from the merger are offset by a 117% increase in the share base. We think Sembmarine is fairly valued currently, and we believe upside will need to be driven by significant new order wins and better-than-expected synergies generated from the merger.