Seatrium    Last:0.091   -

Collapsing margins

Thank you Shplayer and guru too :)  This is such a great place to learn!

 

happybean,

From FA point of view on SembMar, pse see my posts on 3 Nov, 22 & 23 Nov and 3Dec.

At current price levels, I think Sembmar is fully valued..........unless they can increase their shipyard capacity.

Just my opinion.

 

 

Thanks Singaporegal. I really respect your views and analyses :)

 

Hi happybean,

From the TA charts on SembMar, you can see that the Accmulation/Distribution and the Chaikin charts have been downtrending since early December.

The stock price was still moving sideways until now and I believe that its just started to react to the selling pressure.

 

Singaporegal, could u share what information u drew (from the indicators, i assume, from the TA article on your approach) that led you to this conclusion?

TIA!

 

Downtrending now

 

I am getting mixed signal from TA. There is convergence spotted with the closing prices & the A/D Lines which is quite "detrimental", while MACD had "broken" up the "middle" line on the 6th Dec. Bollinger Bands showed upside potential but must wait for a few more days to confirm.

 

Think a number of analysts are very optimistic abt this counter. Is your Downtrend meant for people with short term horizon?

 

Careful... on downtrend now.

 

Sem Marine has secured more rig building contracts. Looking good to hold on or add some more

 

Hi shplayer

Your insights are indeed indept.

And yes, in any commercial agreement between nationalised corporations and foreign-owned companies, there is always the issue of technology transfer.

 

IreneL,

No doubt new orders will be secured... but when it does come, they will be put on the back of the 'orders queue'. Currently final delivery of any rigs is 2009 or 2010. This means that there will not be any 'quantum' jump in revenue growth (and profits)....which will bring down the prospective P/E at current price levels.

Some analysts have touted the idea of some kind of  coorporation to use COSCO's yards to increase capacity. However, in my opinion, this is not likely in the near future. Reasons being:

1. SCM currently holds 6.8% stake. The benefit to SCM will be very marginal.
2. On 15 Nov, SCM announced sale in open mkt of 30 million COSCO shares.....thus diluting their stake in COSCO..... which confirms that such cooperation is not likely.
3. SCM will run the risk of passing their technology to COSCO who can be a serious competitor to both SCM and Keppel. 

 

Singaporegal,

For heaven's sake will you just take your eyes off those charts of yours for a second and take a look at the company figures!!! 

 ... just kidding... of course.   :)

 

Hi

I am agreeable with shplayer's FA of  both SCM and KCL.  And like what jessie said, its about time KCL do a share split to make them even "cheaper"

But though SCM's business potential may be constrained vis-a-vis its current shipyard capacity, we never know how its management may suddenly spring up with more new orders.

 

Looks to be on a gradual uptrend now

 

Thank you shplayer for your analysis. You are really good at it.  Perhaps KCL can consider share split to make it more "affordable".....

 

further to my post of 22 Nov, other factors to consider when comparing SCM and KCL are:



SCM

Its business is in ship building, repair and offshore rigs. Whilst this industry currently is very bouyant, SCM's business growth is constrainted by its current full capacity at all its yards. Unless it acquires new yards, the revenue and profit growth is limited to productivity and cost control efforts.



KCL



KCL has 4 major business segments:

1. Rigs - situation is the same as SCM
2. Kep Land - Properties.....this is showing good growth. The fact that KepLand is out of the Sentosa IR means that its share price does not factor it to win the bid....hence, there will be no downward adjustment when the disappointment of the IR result is announced.
3. SPC - currently, this is abit of a weight around KCL neck.....but bear in mind that the past 2-3 years, SPC's performance has been unprecedented and now it is undergoing some consolidation.. I think 2007 will be a better year when its Oyang field comes onstream.
4. Kep Itegrated Engineering - KIE - recently won a large contract ($billion). This will be the future growth driver....2007/2008....watch out for it.

At this point in time, KCL will seem to have far better growth potential than SCM. Hence, in my opinion, with KCL's P/E (17X) lower than SCM's (26X), and given its brighter growth potential, KCL is a 'cheaper' stock than SCM.

 

One should not merely look at the absolute $$$ price of the stock. It should be compared with more equitable parameters like P/E.



Offhand, I think, SembMar at this level (about 3.26) is trading at a P/E of about 25X. KCL at 16.40 is trading at P/E of 17X.



There are of course other factors to consider.......from a FA point of view.

 

SembMas - The world's second largest rig builder, after Keppel. Those of you who thinks Keppel is expensive should buy this counter. Great value stock, in my view.

 

It is higher on hopes it will secure more orders going forward, dealers said.



DBSV said they prefer to buy SembMar over SembCorp as they expect order flow momentum to pick up in the fourth quarter.