Sembcorp Marine (SMM) announced that it has been awarded a contract by Shell to construct and integrate the hull, topsides and living quarters of the Vito semi-submersible Floating Production Unit (includes installation of Shellfurnished equipment).

This is unlikely a surprise to the market, as it follows a letter of intent between the two parties announced on 5 Dec 2017. The value of the contract is undisclosed, but we estimate it to be within the range of S$500-700m.

To date, we estimate that the group has announced new order wins of about S$1.1b (excludes West Rigel); we keep our full year forecast of S$3b unchanged.

Maintain HOLD with S$2.10 fair value estimate.

Source: OCBC Research - 21 May 2018