SembCorp Marine (S51.SG) likely to rise in afternoon vs +0.9% at $4.49 at lunch break, on news Jurong Shipyard unit secures US$384 million ($501 million) contract to build two jack-up rigs with options for another four jack-ups from Seadrill (SDRL.OS); if options exercised, contract could be worth over US$1 billion in total, says Dow Jones. 

SembMarine says contract its largest rig order to-date. UBS, which has Buy rating, $5.00 target, says “the stars are aligned for a near-term share price rally. Liquidity is abundant and we anticipate positive order momentum in the very near term.” 

 

Adds, pace of new orders announced in last 30 days (last week both Jurong, Sembawang yards reported contract wins) has surprised market significantly; within very short span of time, estimated 2011E earnings backed by order book rose from 80% to 92%. “

 

If SMM is able to confirm new orders in early 2011, these jobs could commence profit recognition within the year, providing further avenues for consensus earnings upgrades.” Raises 2011 net profit estimates by 10%, about 7% ahead of consensus. Stock may test February 2008 peak of $4.73.