SembCorp Marine (S51.SG) is down 1.5% at $5.27 despite announcing that Atwood Oceanics has exercised the first of its three options to build a newbuild jackup rig with SMM’s PPL shipyard, worth $182 million. 

“The broad market is down, so it’s no surprise that the stock is down, the orders were within most of the market expectation and everybody is expecting more jack up orders to still come in,” says DMG analyst Jason Saw. 

 

He adds, with this option, total new orders for 2011 climb to $450 million, 10% of his full-year estimate of $4.5 billion; he estimates total outstanding orderbook at $5.9 billion. 

 

“We expect all the drillers (Atwood, Seadrill and Noble) to exercise remaining ten options for newbuild jackup rigs due to higher charter rates and return for premium rigs compared to normal spec jackup rigs.” He makes no changes to EPS estimates, and maintains a Neutral call with a $5.30 target. The orderbook suggests a $5.23 support.