Company Name: KEPPEL CORPORATION LIMITED
Research House: OCBC
OCBC expects oil & gas companies with expertise in deepwater production to fare better vs those limited to shallow waters in 2011.
“The demand for premium deeper water jack-ups has returned, and Keppel Corp. (BN4.SG) and SembCorp Marine (S51.SG) are likely to see more of such high-spec orders.”
Says push for even more technical assets likely to continue, benefiting companies that do not scrimp on R&D, outlook for smaller offshore support vessels (anchor handling tug supply vessels, platform supply vessels) dimmer than construction vessel segment, given oversupply situation; “however, charter rates of larger and more sophisticated supply vessels are expected to be more resilient given still relatively healthy demand and fewer vessels available.”
Keeps Overweight on sector, says oil prices likely to remain high enough to sustain capex while financing still improving. Preferred picks: Keppel, Buy, $12.50 fair value, SembCorp Marine, Buy, $5.70 fair value.
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