Shares of Sembcorp Marine Ltd plunged as much as 7.7 percent after the company reported a 48 percent fall in its third-quarter net profit mainly due to lower revenue recognition for its rig building projects.
Sembcorp reported a net profit of S$115.5 million ($94.3 million) for its third quarter ended September, down from S$222.5 million a year earlier. Revenue for the quarter fell 31.5 percent to S$892.4 million.
Sembcorp shares hit as low as S$4.33 on Tuesday, the weakest level since June 12. Nearly 13 million shares changed hands, 3.4 times the average full-day volume over the past 30 days.
“Sembcorp Marine is seeing strong market fundamentals and is hoping to add more work to its existing order book by end of the year. However, intense competition from shipyard with excess capacity in Korea and China are putting pressure on margins,” DMG & Partners Securities said in a report.
The broker cut its target price to S$4.61 from S$5.70, citing lower earnings and rising competition for Sembcorp’s shipyard operations.