Oil - Service, Equipment, Pipelines etc

[winston]

not vested

Singapore Hot Stocks-Rigbuilders up on Petrobras order hopes

SINGAPORE, Oct 11 (Reuters) - Shares of Singapore's oil-rigbuilders Keppel Corp Ltd and Sembcorp Marine Ltd surged on Tuesday on hopes they will secure new orders from Petrobras , the Brazilian state-run oil company, traders said.

At 0348 GMT, Keppel was 4.1 percent higher at S$8.35 while Sembcorp Marine was up 4.3 percent at S$3.66.

Upstream, a newspaper focused on oil and gas, reported that Petrobras received bids for the charter of 21 ultra-deepwater rigs, that the company tendered out in June, to be built in Brazil.

"We believe the chances of Keppel and Sembcorp Marine getting orders are high," RBS said in a report.

"Demand for newbuild is strong and structural, especially in the case of Brazil which is seeing production volumes facing a bottleneck from the lack of rigs."

Source: Reuters

[winston]

not vested

RESEARCH ALERT-CIMB downgrades Sembcorp Marine shares

SINGAPORE, Oct 19 (Reuters) - CIMB Research has cut rigbuilder Sembcorp Marine Ltd to underperform from outperform, and cut its target price to S$3.30 from S$5.30 .

The broker also downgraded Singapore's offshore and marine sector to underweight from neutral, following the recent run-up in their stocks, and as it expects companies face slower orders going into 2012.

Moreover, CIMB expects offshore and marine firms to see lower margins in 2012-2013, due partly to tougher competition and rising financing costs.

Larger rival Keppel Corp's target price was also lowered to S$8.90 from S$10.50, as CIMB cuts its earnings estimates by 4-21 percent for 2011-2013 to reflect a downgrade of its property arm Keppel Land .

"We believe the market has priced in Petrobras wins and see limited major catalysts in the near term," CIMB said.

Source: CIMB

[winston]

Singapore offshore and marine sector

More options expired recently as drillers' plates are full with prevailing newbuild programmes.

We expect little interest in Singapore rig builders, at least until 2H12 when distressed assets start to stream in the market, marking the bottom of the cycle.

We believe the exercise of rig options is unlikely for the rest of 2011.

Drillers are in no hurry to place new orders as they focus on the execution of existing newbuild programmes.

Maintain Underweight on the sector.

We prefer SembCorp Industries for its near-trough valuations and O&M exposure.

Source: CIMB

[winston]

not vested

Singapore Hot Stocks-Rigbuilders up on strong order outlook

SINGAPORE, Jan 10 (Reuters) - Shares of Singapore rig builders Keppel Corp Ltd and Sembcorp Marine Ltd rose on Tuesday, as analysts said the two companies are well positioned to capture more orders.

At 0207 GMT, shares of Keppel Corp and Sembcorp Marine were up 2.2 percent and 3.3 percent, respectively, outperforming the broader Straits Times Index <.FTSTI> which was 0.4 percent higher.

DMG & Partners, which hosted Sembcorp Marine's chief financial officer Tan Cheng Tat at a recent event, said management was confident of winning more than S$5 billion ($3.9 billion) of new orders in 2012, higher than S$3.7 billion in 2011.

"Management was particularly upbeat on new order prospects and believes Sembcorp Marine will see higher fresh order wins in 2012," DMG said, adding that the company is committed to building a strong presence in Brazil.

DMG maintained its buy rating and a target price of S$5.25 on Sembcorp Marine stock.

Keppel Corp shares were lifted on Tuesday by its announcement that it had won a contract worth around $150 million from Diamond Offshore Drilling Inc, to construct and upgrade a deepwater semi-submersible rig.

DBS Vickers said there is significant pent-up demand for semisubmersible rigs on the back of strengthening fleet utilization rates, a shrinking orderbook due to a lack of new orders over the past three years and a highly aged fleet.

DBS's order wins assumption for Keppel Corp's 2012 and 2013 fiscal years are S$6 billion and S$5 billion, respectively.

Source: Reuters

[winston]

not vested

On Wednesday, shares of Singapore oil rig builders Sembcorp Marine Ltd and Keppel Corp Ltd were up 4.1 percent and 1.3 percent, respectively.

"We remain overweight on the offshore and marine sector and believe Keppel Corp and Sembcorp Marine are well positioned to benefit from increased industry spending and any upgrade/replacement opportunities," Deutsche Bank said in a report on Wednesday.

Interest has been returning to mid or deepwater rigs, Deutsche said, adding that higher activity in the U.S. Gulf of Mexico may bode well for Keppel Corp and Sembcorp Marine.

Source: Reuters

[winston]

not vested

KEP and SMM well positioned; maintaining Buy

We remain overweight on the O&M sector and believe KEP and SMM are well positioned to benefit from increased industry spending and any upgrade/replacement opportunities.

Our SOTP-based target prices are as follows: KEP S$13.40, SMM S$5.80 and SCI S$6.65.

Risks: US$ depreciation, execution and any sustained plunges in oil prices

Source: DB

[winston]

not vested

Laggards in O&M sector

Not surprisingly, the laggards in the current O&M sector rally have been the smaller cap O&M stocks.

Swiber and ASL Marine are clear laggards.

Unfortunately, traders may find that they remain so as our chartist does not see positive technical indicators.

Source: CIMB

[winston]

not vested

DBSV Research sees O&M and energy stocks continuing to ride on the high oil price.

Increased E&P budgets of oil companies, robust offshore activities with rig utilisation rates on an unabated upward trend since early 2011 are all positive for the sector.

Our picks are Keppel Corp, STX OSV, Ezion and Sakari Resources.


Source: DBS

[winston]

Citi ups target prices for rigbuilders

In addition to orders from Brazil's Petrobras, Singapore rigbuilders such as Keppel Corp Ltd and Sembcorp Marine Ltd will benefit from oil prices at current levels, as more exploration and production activity underpins the sector, Citigroup said.

The broker raised its target price for Keppel to S$12.80 from S$12.00 and for Sembcorp Marine to S$6.10 from S$5.90, but said Sembcorp is better positioned to secure more than six rig orders from Petrobras, due to economies of scale.

Citi also noted that crude oil prices at $125 a barrel are at a sweet spot and should encourage more exploration and production spending, and may further tighten rig availability.

Citi raised its target price for Sembcorp Industries Ltd to S$6.00 from S$5.83, and kept its buy rating on all three companies.

Shares of Keppel Corp, the largest rigbuilder, were up 1.2 percent at S$10.89, while smaller rival Sembcorp Marine's shares were up 0.8 percent at S$5.27. Sembcorp Industries rose 0.6 percent to S$5.18.

Sembcorp Marine and Sembcorp Industries have outperformed a 24 percent rise in the FT ST Oil&Gas index <.FTFSTAS0001> so far this year, while Keppel has underperformed.


Source: Reuters

[winston]

not vested

Singapore Shipyard- Roaring start to 2Q12 for rig builders

SMM’s contract wins ahead of forecast. SMM has won contracts worth S$2.4b, of which S$1b was a drillship contract from Sete Brasil and S$1.4b worth of contracts from other customers.

Keppel’s contract wins total S$838m ytd.

SMM’s contract wins are running ahead of our forecast. We had earlier forecast S$10b worth of contract wins for 2012, of which S$7b is expected from Sete Brasil (for seven drillship orders) and S$3b worth of contracts from other customers.

We now raise our contract win projection for 2012 to S$11b, which includes a higher S$4b worth of contracts from other customers from S$3b previously.

We maintain our 2012’s contract win forecast for Keppel at S$10b, of which S$6b is expected from Sete Brasil (for six semis) and S$4b from other customers. This difference in our contract win forecasts for SMM and Keppel is due to SMM having secured a S$1b drillship order from Sete Brasil in February whereas Keppel had earlier secured a similarly large S$1.05b order in Dec 11 to build a semi for Sete Brasil.

We maintain our contract win projections of S$6b each for 2013 and 2014, for both Keppel and SMM.


Maintain BUY and target prices of Keppel (S$12.70) and SMM (S$6.10). Our target prices value Keppel’s and SMM’s own shipyard business at 18x 2013 earnings.

Using SMM as a guide to a pure shipyard play, the long-term 1-year forward PE mean since 2003 is 12x. But, at the bottom of the cycle in 2009, the PE was a mere 3.5x whereas at the recent cycle peak in Apr 11, the 1-year forward PE was 21x.

The P/B valuation correspondingly went from 1.4x to 5.0x. We have raised our 2012’s contract win assumption for SMM, but our earnings forecasts are relatively unchanged.


Source: UOBKH