Offshore & Marine - Switching picks to SMM

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Offshore & Marine - Switching picks

While an order-book decline could cap Keppel Corp's share price, a 9% potential increase in order book by end-2013 and order newsflow could catalyse Sembmarine's. We replace KEP with SMM as our top pick in the big-cap O&M segment.

SMM has underperformed the index by 11% YTD vs. KEP's -4%. It is contending with Daewoo Shipbuilding for three CJ-70 harsh-environment jack-up rigs from Noble and Maersk, worth US$600m each. KEP is not in the running for these as it prefers to focus on standard jack-up rigs. Maintain Overweight with sector catalysts expected from order wins.

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