Keppel Corp 01 (May 08 - Dec 14)

[winston]

Wonder what they will be doing with K1 Ventures ? Continuing to return special dividends to shareholders ?

[winston]

From OCBC:-

Keppel Corporation: Remain cautious despite contract wins

Keppel Corporation (KepCorp) announced yesterday that it won three contracts worth S$300m. Two contracts were from existing customers while the third was from Noble Drilling (not related to commodities company Noble Group). Our forecasts have factored that KepCorp would win about S$2b worth of contracts in 2009, implying a win rate of about S$500m per quarter.

While this development puts some ease into our forecasts, we are still mindful that these contracts are not new builds but conversion projects. This connotes that oil companies may still be sitting on the sidelines to watch oil price development prior to committing to new capex this year.

While KepCorp’s share price has appreciated S$1.11 from its base to its highs in the recent technical bounce, we recommend investors who have made some gains to sell into the rally until clearer industry fundamentals surface. Maintain HOLD with fair value of S$4.40. (Kelly Chia)

[ucypmas]

Grim news for the shipbuilding giants in Singapore. Next few years will be difficult if global trade and economic outlook does not turn around. But any competitor who does not make it past this downturn will be beneficial to the survivors left standing at the end of the cycle.

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Shipbuilding
Sink or swim

Mar 26th 2009 | HONG KONG
From The Economist print edition
A deluge of new ships pours into a drowning industry

LIKE unwelcome guests who will not leave, 453 container ships, 11% of global capacity, now float outside the harbours of Hong Kong, Singapore and other South-East Asian ports. They are unwanted by their hosts as well as their customers. In recent days China has quietly let it be known that it wants to rid its territorial waters of these nautical squatters.

Only five years ago huge demand from China meant that all these ships, and more, were desperately needed. This had a dramatic impact first on shipping rates, and then on supply. Between the end of 2006 and July 2008, shipyards received enough commissions to double the world’s fleet. Now these new ships—more than 9,000 vessels—are taking to the water just as demand has collapsed. The world is awash with ships.

To see how the recent boom and bust has affected value, a Hong Kong broker cites a 150-tonne “Cape class” ship that sold in 2003 for $18.5m in the used market. Critical to the price was the prevailing charter rate, then $15,000 a day. By last summer this had risen to $175,000 a day, and an identical ship sold for $85m. Rates peaked shortly thereafter at $300,000. Today rates are back where they were in 2003. Rather than try to find a buyer for another identical ship, albeit one that needed repairs, the owner dumped it for $7m to be used as scrap.

Orders for new ships have, not surprisingly, collapsed and scrutiny has shifted from what can be bought to what can be cancelled: nothing, it turns out, without great effort. South Korea’s shipyards, the global leaders, have learnt from previous busts. They typically demand 20% up front, a further 60% during construction, and the final 20% payment upon delivery. Walk away and you lose a fortune.

These shipyards have good reason to play tough. Along with a loss of revenue, cancellations cause operational chaos. Worse still, orders are booked in dollars, but to cover local production costs shipyards buy forward currency contracts, transforming their obligations into won. The contracts are paid off in dollars by the buyers. But what if the buyer cancels? Analysts are warning that the resulting demand for dollars to unwind currency contracts, estimated at $10 billion-30 billion, will put further pressure on the won.

Buyers, meanwhile, have their own pressing problems. Martin Stopford, managing director of Clarkson Research, a maritime-research firm, estimates the backlog in shipyards at $526 billion. Some of this comes with first-class payment guarantees, but not all. That requires large amounts of credit, largely from banks which are hardly in a generous mood and are fully aware that their collateral, if the buyer stumbles, has just depreciated.

Given mutual interest in survival, yards and ship owners are no doubt discussing delays. These talks are typically kept quiet, but Cosco Singapore, a big shipbuilder, recently said that the construction of 30 bulk carriers had been deferred or cancelled. Steve Man, an analyst at HSBC, says this is the tip of the iceberg. He thinks more than half the deliveries for 2010 will be delayed—and shipyards will agree because the alternative is no work after 2011.

Weaker shipyards are already being weeded out. Two South Korean shipyards that started up in response to the boom have recently collapsed: SNC Shipbuilding defaulted on a key loan on March 17th, and C& Heavy Industry said on March 24th that a Malaysian buyer had emerged to take over its assets. Many new shipyards are thought to have closed in China without so much as a yelp.

Theoretically the fall in prices should trigger a contraction of supply, as older ships are scrapped and new orders are cancelled. In practice, however, shipyards usually complete ships that are under construction, even if the buyer walks, in the hope of selling them to someone else.

And shipbuilders have strong government support: in China they are beneficiaries of the $585 billion stimulus package, and domestic firms are being encouraged to pick up any orders cancelled by foreign buyers. Not to be outdone, India and Vietnam are subsidising the expansion of their own shipbuilding operations. More new vessels will merely widen the circle of losses, extending it from builders to shipping lines themselves, and back to even the strongest builders as competition intensifies. Rather than a bail-out, what the industry really needs is for some participants to sink.

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[winston]

Keppel wins $342 mln deal for UK waste energy plant

SINGAPORE, April 9 (Reuters) - Singapore's Keppel Corp said on Thursday a subsidiary had secured a 233 million pounds ($342 million) contract to build a waste-to-energy combined heat and power plant in Britain.

The renewable energy project in the Manchester area will be one of the largest in the country when completed in 2012, producing up to 270,000 megawatt hours of electricity from household waste, the firm said in a statement.

[LenaHuat]

I'm surprised that no1 here has commented abt LBY helming KepCorp.
With this announcement, I've lost complete interest in this ticker.

[iam802]

This go straight to the trashcan when I read about LBY heading it.

[millionairemind]

I'm surprised that no1 here has commented abt LBY helming KepCorp.
With this announcement, I've lost complete interest in this ticker.

They got to put a retired top civil servant some where right?? Remember David Lim???

Well, don't put it in your trashcan... put it on your short list... .. and I mean literally get ready for shorting..

[LenaHuat]

[winston]

-- KEPPEL CORP - Deutsche Bank on Tuesday reiterated its "buy" call on Keppel Corp, the world's biggest maker of offshore oil rigs, and raised its price target to S$9.40 from S$7.10.

[ichew]

kepcorp selling spc for $1.47b cash ($6.25 per sh)
hmm wondering if kepcorp is good for a trading buy ... sigh another million-dollar qn