DJ MARKET TALK: STX OSV, Cosco, Keppel May Be Vulnerable On Subsea -GS

1019 GMT [Dow Jones] STOCK CALL: If Saipem's (SPM.MI) profit warning has a read-across for the entire subsea E& C market, STX OSV (MS7.SG), Cosco (F83.SG) and Keppel (BN4.SG) are likely vulnerable given their subsea-order exposure, Goldman Sachs says. It says existing orders may be at risk of default if E& C companies' balance sheets weaken significantly, which the house sees as unlikely as Saipem still expects to be profitable in 2013. New order estimates also may be at risk as players may look to pressure new-vessel order prices to relieve their own margins " we see this as possible, though we believe that instead of managing down costs, E& C companies may look to improve margins by improving execution on new projects by using higher quality vessels, which is positive for top class yards like STX OSV and Keppel." It adds, until other E& C companies report earnings and provide guidance, it's premature to ascertain impact. But it notes, even in a bear-case scenario, it sees limited impact on Cosco and Keppel as the house expects limited subsea orders for them. It expects 30% of STX OSV's 2013-14 orders to be from the subsea market, but even assuming no subsea orders, it estimates an only around 13% negative impact on 2013-14 EPS. (leslie.shaffer@dowjones.com)