Industry analysts

New orders expected from foreign firms

Ephraim Se ow

ephraimseow@mediacorp.com.sg

SINGAPORE

Nomura and OCBC have recommended investors to buy into Keppel Corporation — the parent company of Keppel Offshore & Marine — and Sembcorp Marine in their latest investment research reports.

Sembcorp Marine and Keppel Offshore & Marine reported strong order books in their second quarter financial statements.

Sembcorp Marine has a net order book of $4.3 billion with completion and deliveries stretching till December 2012. This includes $853 million in contract orders secured from this January to early this month.

Keppel Offshore & Marine Division’s net order book stands at $5 billion with deliveries into 2013. It has secured $1.9 billion of new orders as at late July. The company has also tendered for some of Brazilian energy giant Petrobras’ new projects.

“Keppel remains our sector pick given the high chance of it winning some of Petrobras’ orders, good track record and potential support from its other businesses,” said OCBC analyst Low Pei Han.

Petrobras plans to build 28 oil rigs in Brazil, as part of its US$220 billion ($298.3 billion) investment to develop oil fields.

In its report, Nomura cited a Keppel management source as saying that in preparation to tap on this opportunity, Keppel’s BrasFELS in Brazil is reserving between 20 per cent and 30 per cent of yard capacity for rigs.

Nomura analysts also noted that oil prices are still supportive of long-term capital expenditure and there is a likely resurgence of new orders from other national and international oil companies.

Keppel Corp shares closed at $8.75 and Sembcorp Marine ended at $3.85 last Friday.— Financial analysts expect companies in the offshore and marine (O&M) sector here to sparkle over the next couple of years. These companies are likely to- outperform the overall market as rising new orders are expected from international oil firms, the analysts said.

It is natural to sell on news.......should view as a buying opportunity.....time to collect cheap

Sembcorp Marine sets sights high

Singapore-based rig builder Sembcorp Marine beat expectations with a 28% rise in second-quarter profit, adding it hopes to win at least S$2 billion to S$3 billion (US$1.4 billion to US$2.2 billion) in new orders this year.

 

"The fundamentals driving the offshore oil and gas sector remain intact with oil prices remaining above the $70 a barrel range," Sembcorp Marine said in a statement. It added that while the US moratorium on deep-water drilling may hurt orders for new oil rigs in the short term, it may result in increased sales in the medium term. "Potentially, this may result in the upgrading of existing rigs to meet the more stringent requirements and new rig orders to replace the aging fleet for drilling in deep waters," it said.

The S$2 billion to S$3 billion new orders forecast does not include potential oil rig orders from Brazillian state oil company Petrobras, Sembcorp told a media and analyst briefing. The company has lodged bids with Petrobras for seven drillships and two semi-submersible rigs, it said.

Sembcorp Marine, 61% owned by Sembcorp Industries, posted a net profit of S$176.1 million in the April-June period, up from S$138.1 million a year earlier. The result beat the S$141.6 million average forecast of two analysts surveyed by Reuters. The better result was due to early project completions and higher margins as productivity rose, Sembcorp said.

Sembcorp said its order book stood at S$4.3 billion, down from the S$5 billion figure reported in May.

Sembmarine $4.00 + 4c TP Spot on!