SembCorp Marine has secured a S$200m FPSO conversion contract from Modec. We believe that the outlook for the production segment is more positive than rig-building as infrastructure is needed to support oil discoveries in recent years. Separately, SMOE and Saipem are contending with Nippon Steel for a US$600m processing platform project from Premier Oil. We believe that the production segment in the offshore & marine value chain would be less susceptible to credit volatility as FPSO and processing platforms are typically owned and operated by oil companies with stronger financial muscles. Maintain Outperform and target price of S$2.28, still based on blended valuations.