Keppel Corp 01 (May 08 - Dec 14)

[millionairemind]

January 22, 2009, 5.34 pm (Singapore time)

Keppel FY net profit up 6.9%, outlook challenging

SINGAPORE - Singapore's Keppel Corp, the world's largest offshore oil rig builder, posted a 6.9 per cent rise in full-year net profit on Thursday, and said 2009 will be a challenging year.

The conglomerate earned $1.097 billion (US$0.729 billion) last year, up from $1.026 billion in 2007. It did not report separate results for the fourth quarter.

'By the end of 2008, the global economic situation had deteriorated so far that the world tanked into a recession,' the firm said in a statement. 'There is little doubt that Keppel will be impacted by the global crisis.'

Keppel Corp and rival Sembcorp Marine benefited from the jump in oil exploration in recent years as crude prices soared to record highs, but oil prices slid from near-US$100 a barrel early in the quarter to around US$45 by the end of 2008.

Keppel said earlier this month it agreed to cancel a US$405 million rig contract deal with Scorpion Offshore, after warning in November that three clients may cancel orders worth $1.2 billion.

Shares of Keppel Corp fell about 45 per cent in October-December, underperforming a 25 per cent drop in the broader Straits Times Index and a 44 per cent drop in rival rigbuilder Sembcorp Marine. -- REUTERS

[millionairemind]

Keppel Corporation
Neutral
DMG & Partners Securities
Jan 23 close: $4.10

2008 earnings in line with market expectations. Keppel Corp reported record 2008 revenue of $11.8 billion (up 13.2 per cent y-o-y) aided by higher contributions from its offshore and marine (O&M) and infrastructure divisions. Core recurring 2008 profit after tax and minority interests (PATMI) of $1.1 billion (up 6.9 per cent y-o-y) was in line with the market consensus estimates of $1.07 billion. Positive spot came from improved O&M margin of 9.8 per cent (up 190 basis points y-o-y).

The negative drag was the poor performance from Singapore Petroleum Co (SPC). While Keppel's 2008 results were credible, total distribution of 35 cents/share declared was slightly disappointing. This implied a dividend payout of 51 per cent - the lowest in five years - and at the lower end of management's guidance of 50-60 per cent.

O&M to face headwinds. The O&M division's 2008 revenue of $8.6 billion (up 18 per cent y-o-y) accounted for 73 per cent of Keppel's revenue, while O&M's full-year PATMI of $705 million (up 35 per cent y-o-y) contributed to 64 per cent of Keppel's PATMI as the division saw the successful completion of 13 jack-ups and three semis.

Having current backlog orders of $10.8 billion, the management maintained that the yards would still be busy, with 10 jack-ups and six semis stipulated for delivery in 2009. However, we reiterate our cautious stance on the O&M sector, and opine any significant newbuild contract to occur only in H2 2009 soonest. Our 2009 and 2010 full-year new order estimates stay at $2.2 billion and $2.6 billion respectively.

Revenue from the infrastructure division surged 75 per cent to $2.2 billion, while PATMI jumped 133 per cent to $63 million in 2008, buoyed by strong EPC (engineering, procurement & construction) contributions from Qatar Solid Waste management and Tuas South Incineration Plant. Nonetheless, this was little comfort to the lower contribution from the investments division dragged down by SPC's poor performance.

Not time for a 'buy' yet, downside risks persist. We advocate that it is still too early to turn buyers on this counter. Downside risks persist including potential orderbook cancellations and sustained period of depressed oil price.

However, we are comforted that Keppel's improved ROE of 22.4 per cent, strong free cash flow of $1.9 billion and net cash position of 0.04x will strengthen Keppel's ability to weather this crisis. Our recommendation stays at 'neutral' with a revised target price of $4.48 (from $4.53) due to DMG's revised target price of $1.80 (from $2.00) for Keppel Land and updated market values for the listed entities.

[millionairemind]

Rowan kills 1 jack-up and stalls 2

By Upstream staff

Houston-based Rowan Companies killed plans to build a new jack-up rig, stalled construction on two others, and axed its dividend, the company said today.

Rowan cancelled construction on one 240C-class jack-up rig and delayed the second, the Joe Douglass.

The rigs were part of the company’s plan to build four new 240C jack-ups at LTI, its manufacturing subsidiary, according to a government filing.

Rowan will decide mid-year whether to restart construction on the third rig, the company said.

The first rig in the programme, Rowan-Mississippi, was completed in November, and construction of the second 240C, Ralph Coffman, is proceeding on schedule, with delivery expected at the end of this year.

Rowan also had planned to build four Super 116E class jack-up rigs, dubbed Rowan EXLs, with Singapore-based Keppel AmFels.

The company is continuing work on the first three Rowan EXLs, with delivery of each planned for next year.

But Rowan asked Keppel to stop work on the fourth rig pending a decision in the coming months about whether to go forward. The company is trying to renegotiate the payment terms with Keppel on each rig.

With the changes, Rowan now estimates its capital expenditure budget this year will be $550 million to $575 million. It will be met with available cash and operating cash flows.

The downturn in oil and credit markets has hurt Rowan’s customers as well. The company is already receiving delay requests and cancellations for work in progress and it is renegotiating some contracts terms, it said in the filing.

The company said it anticipates having problems collecting outstanding debts.

“While LTI intends to assert its contractual rights, certain of its customers may not have the financial capacity to perform or may seek to deny their contractual obligations to LTI, which could mean a significant portion of LTI’s external backlog of $558 million, may not be realised,” the company state in its filing.

Rowan has eliminated its planned $0.10 per quarter common stock dividend, saying the move will save about $45 million that will go to general operations.

[millionairemind]

Keppel Corp
Jan 28 close: $4.18
DMG & Partners Securities, Jan 23

FY08 earnings in line with market expectation: Keppel Corporation reported record FY08 revenue of $11.8 billion (+13.2 per cent year-on-year) aided by higher contributions from O&M and Infrastructure divisions. Core recurring FY08 profit after tax and minority interest (Patmi) of $1.1 billion (+6.9 per cent y-o-y) was in line with the market consensus' estimates of $1.07 billion. While Keppel's FY08 results were credible, total distribution of 35 cents/share declared was slightly disappointing. This implied a gross dividend payout of 51 per cent - the lowest in five years - and at the lower end of management's guidance of 50-60 per cent.

O&M to face headwinds: O&M's FY08 revenue of $8.6 billion (+18 per cent y-o-y) accounted for 73 per cent of Keppel's revenue, while O&M's FY08 Patmi of $705 million (+35 per cent y-o-y) contributed to 64 per cent of Keppel's Patmi as the division saw the successful completion of 13 jack-ups and three semis. Having current backlog orders of $10.8 billion, the management maintained that the yards would still be busy, with 10 jack-ups and six semis stipulated for delivery in FY09. However, we reiterate our cautious stance on the O&M sector, and opine any significant newbuild contract to occur only in H209 soonest. Our FY09 and FY10 new order estimates stay at $2.2 billion and $2.6 billion respectively.

Not time for a 'buy' yet, downside risks persist: We advocate that it is still too early to turn buyers on this counter. Downside risks persist, including potential orderbook cancellations and sustained period of depressed oil price. However, we are comforted that Keppel's improved ROE of 22.4 per cent, strong free cash flow of $1.9 billion and net cash position of 0.04x will strengthen Keppel's ability to weather through this crisis.

Our recommendation stays at 'neutral', with a revised TP of $4.48 (from $4.53 previously) due to DMG's revised TP of $1.80 (from $2 previously) for Keppel Land and updated market values for the listed entities.
NEUTRAL

[millionairemind]

Published January 31, 2009

Contract amount not at stake: Keppel

DESPITE an adverse market reaction where Keppel Corp shares lost five cents to close at $4.05 yesterday, analysts are not unduly worried about the state of the latest contract difficulties between its US unit Keppel AmFels and its client Rowan Companies, mainly because of the good financial position of the US contract drilling services provider.

'Rowan appears to be in a relatively healthy position with a net gearing of only 10.5 per cent (Sept 2008) and has US$155 million of credit available under an undrawn credit facility, according to an article in Energy Current,' Deutsche Bank said in a recent report.

Analysts are also impressed by Keppel's cash pile. 'Keppel is in a strong position, with its robust balance sheet and sizeable cash pile, which should allow it to ride out the difficult operating conditions. Keppel currently has a net cash position of $275 million,' added Deutsche Bank.

In addition, Keppel reiterated that construction on only one of the four jack-up rigs that it is building for Rowan is being suspended, while the other three of the four rig order is ongoing. 'The contract amount of US$780 million for all four rigs is not at stake. Keppel AmFels is under no obligation to revise its contractual terms on the rig orders from Rowan Companies,' a Keppel spokesman said. 'Nevertheless, it is reviewing Rowan's recent request for a temporary suspension of its fourth rig, and will agree only if terms are acceptable to Keppel AmFels

[millionairemind]

This is the website I use to track all the news on oil and gas. Hope it is useful to you. Similar to Lloyds for Shipping news.
http://www.upstreamonline.com/live/article171634.ece

Keppel unveils ultra-deep workhorse

By Upstream staff

Singapore’s Keppel Fels shipyard has finished work on Transocean’s ultra-deep semi-submersible Development Driller 3, destined for an initial contract with BP in the US Gulf of Mexico.

The unit is Keppel Fels’ third built to its proprietary DSS 51 design, developed in collaboration with Dutch group Marine Structures Consultants and intended for ultra-deep exploration at remote sites.

The rig is capable of drilling wells up to 37,500 feet deep in water up to 7500 feet deep, upgradable to depths of 40,000 feet in water up to 10,000 feet deep.

The vessel’s 13,500-tonne payload is designed to allow operators to stockpile equipment, reducing the cost of supplying the rig far offshore.

Keppel said the rig also featured “double-skinned” leg walls designed to protect the vessel from harsh seas. It said the vessel was well suited to operations in the hurricane-prone US Gulf, as well as in other deep-water environments off Brazil, in West Africa and in Southeast Asia.

The shipyard said it had worked closely with Transocean to incorporate the US driller’s proprietary dual-activity into the existing DSS 51 design.

“We have the flexibility and control in adapting our own designs to address technological changes in terms of drilling processes and drilling equipment, among others,” said Tong Chong Heong, chief executive of Keppel Fels parent company Keppel Offshore & Marine.

“This flexibility allows us to serve our clients better, and to create a solution that is best suited to their operating requirements,” he added.

He said Keppel was the only shipyard group with in-house design capabilities for deep-water semi-submersibles.

Including the Development Driller 3, Keppel has now completed three of eight orders to date for its DSS series rigs.

[LenaHuat]

Hi MM
Thanks a million

[LenaHuat]

SINGAPORE, March 30 - Singapore's Keppel Corp <KPLM.SI>, the world's largest maker of offshore oil rigs, said on Monday it has clinched three contracts worth about S$300 million

[ucypmas]

I wonder how many saw this article in the BT on Sunday. It features the new CEO of Keppel and interestingly, he spoke about reviewing their operations and possibly selling off units where they think they cannot grow anymore.

Just some thoughts that perhaps some of Keppel's units are worth a look. Their core ship and rigbuilding businesses will stay, but maybe companies like M1 will find themselves on the block. So could be interesting times ahead.

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CEO pushes for a fighting fit Keppel

Choo Chiau Beng sets top priority to make the group leaner and stronger

KEPPEL Corp chief executive officer Choo Chiau Beng has made clear his immediate mission in his maiden annual report as CEO - to lead the company out of the downturn in fighting-fit condition.

'For us, prudent financial management is important in growing our business in good times and sustaining them in bad times.'
Choo Chiau Beng

'My top priority is to make Keppel fighting-fit by becoming leaner and stronger,' said Mr Choo. 'To achieve this, we are reviewing all our businesses to see how we can create further value out of them. We will rationalise and restructure, and even shed some operations where we are unlikely to extract much more value.'

He conceded that, like many other businesses, Keppel's various business units have also been affected by the downturn. Delayed launches of residential property projects, volatility in crude oil prices and the resulting drop in rig orders, and a slowdown in infrastructure projects coming onstream have all had an impact.

But Mr Choo said: 'Over the longer term, we remain confident of the fundamentals of the industries we are in.'

'We believe there continues to be growth potential in our key businesses, as they meet global needs which are real, concrete and enduring.'

However, Keppel is approaching the future with more caution. It will continue to go after contracts and projects that are cash flow positive and infrastructure projects that give steady recurring income. 'Capital expenditure requirements and new investments will be evaluated selectively and carefully. We will invest only if the returns are meaningful,' said Mr Choo.

He noted that Keppel's yards will be busier this year than last, with 14 rig deliveries scheduled and ongoing floating production, storage and offloading conversions. However, they will continue to manage costs tightly and are careful to take on projects that have 'good downpayments and timely progress payments', Mr Choo said. Keppel's offshore and marine division will also make use of the slowdown to strengthen its research in newer technologies and competencies and enhance its suite of proprietary designs and technological solutions.

Keppel is also on the lookout for opportunities. The property division is keeping an eye out for selective acquisitions if good opportunities present themselves and the infrastructure division will exploit synergies to grow the business and optimise value, Mr Choo said.

Despite the wild swings in oil prices, SPC remains a key part of the Keppel group, he emphasised. 'We support its strategy to diversify its earnings base by further growing its portfolio of upstream assets,' said Mr Choo, noting that in 2008, the upstream business, where SPC has nine production sharing contracts and one exploration permit across the Asia-pacific region, contributed about 40 per cent of the company's after-tax earnings.

'The downturn presents opportunities and SPC will continue to invest prudently to benefit from an eventual recovery of the global economy,' Mr Choo said.

He concluded: 'For us, prudent financial management is important in growing our business in good times and sustaining them in bad times.'

Mr Choo highlighted that Keppel ended the year in a net cash position of $275 million and a cash balance of some $2.2 billion.


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[LenaHuat]

M1 should be sold a long time ago. Oil prices are likely to stay in the USD40 to 50 range for the next 2 years for the global economy to recover. Hence this ticker is unlikely to see explosive growth. KepLand and K-Reit are 'too big' to be hived off.