STOCKS NEWS SINGAPORE-CIMB, DMG cut Sembcorp Marine target

CIMB Research and DMG & Partners Securities cut their target prices on Singapore's Sembcorp Marine Ltd after the world's second-largest rig builder reported a 4.6 percent fall in second-quarter net profit to S$142.8 million ($114.3 million).

Sembcorp Marine shares were down 0.6 percent at S$4.85 on Friday. The stock has risen about 27 percent so far this year versus the nearly 15 percent gain in the broader Straits Times Index.

CIMB cut its target price to S$5.85 from S$6.50, after reducing its earnings per share (EPS) estimates by 6-11 percent for Sembcorp's 2012-2014 fiscal years.

CIMB said Sembcorp's first-half core net profit was weaker than expected as the company executed lower-margin projects secured during the 2009-2010 order drought. The weakening U.S. dollar and euro also dragged margins down, it added.

But sustained high oil price, stronger pick-up in the second half of 2012 and order flows could be the stock's catalyst, said CIMB, which has an outperform rating on Sembcorp.

DMG lowered its target price to S$5.70 from S$5.80, after cutting its EPS estimates by 5 percent for the 2012 fiscal year and by 10 percent for 2013 on lower margin assumptions, and kept its buy rating.

Sembcorp maintained its operating margin target of 14-15 percent for 2012 as it expects margins to improve once the higher-priced jack-up rig orders are executed, the broker noted.

1050 (0250 GMT)

(Reporting by Eveline Danubrata in Singapore; eveline.danubrata@thomsonreuters.com) ($1 = 1.2495 Singapore dollars)