Company Name: KEPPEL CORPORATION LIMITED
| Research House: Citigroup | Price Call: BUY | Target Price: 12.80 |
Stock Name: SembMar
Company Name: SEMBCORP MARINE LTD
| Research House: Citigroup | Price Call: BUY | Target Price: 6.10 |
Besides's orders from Brazil's Petrobras, Singapore rigbuilders such as Keppel Corp and Sembcorp Marine 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 $12.80 from $12.00 and for Sembcorp Marine to $6.10 from $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 US$125 ($157) 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 to $6.00 from $5.83, and kept its buy rating on all three companies.
Shares of Keppel Corp, the largest rigbuilder, were up 1.2% at $10.89, while smaller rival Sembcorp Marine's shares were up 0.8% at $5.27. Sembcorp Industries rose 0.6% to $5.18.
Sembcorp Marine and Sembcorp Industries have outperformed a 24% rise in the FT ST Oil&Gas index so far this year, while Keppel has underperformed.
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