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The offshores were trading mixed yesterday and they did not participate in the rebound.
Kepcorp did attempt to rebound but it is lacking of conviction. Closing with a bullish harami pattern, Kepcorp will attempt to rebound back to its 20ma resistance line at 11.60 level.
Sembcorp also attempted to rebound but it will be facing resistance from its 100 & 200ma line at 5.30 level.
Sembmar did not continue to head lower yesterday and instead, it rebounded slightly. Sembmar will likely to continue to consolidate before it can have a more decisive downward movement.
Overall, the offshores will likely to continue to trade indecisively today.
Shipyards got their own in-house contractor to do their jobs. So it doesn't really affects them at all. They can just get more in-house contractors to make up for the numbers of workers required.
SINGAPORE: Singapore yards are confident that they will be able to cope with the government's latest move to tighten foreign manpower growth.
Both Keppel Offshore & Marine and Sembcorp Marine said they have been improving productivity and processes through training and technology.
Analysts are also confident that both companies will be able to out-source lower value jobs to their overseas yards.
The government will be cutting the marine sector's foreign worker employment ratios by lowering the dependency ratio ceilings (DRC).
From January 2016, marine companies will have their DRC lowered - from the current ratio of one local to five foreigners to one local to 4.5 foreigners. The ratio will be further trimmed to one local to every 3.5 foreign workers in 2018.
Foreign worker levies will also be raised. However, both Keppel and Sembcorp said they employ mostly skilled workers. The higher levies will therefore have a comparatively smaller impact on them.
Low Pei Han, an investment analyst with OCBC Investment Research, said: " We don't really expect a significant negative impact on the key stocks in the sector, mainly due to the time given for them to make the changes. This is also a well flagged issue, so it was widely anticipated."
Singapore-listed Keppel Corporation and Sembcorp Marine are two of the world's largest rig builders by market share. Both firms said they have been setting aside significant resources to enhance operational efficiencies through facility upgrades and improvements.
Keppel said its overseas yards in China, the Philippines and Bintan will be able to take on more projects to support its Singapore yards.
Recruitment agencies are also seeing more Singaporeans taking up jobs in the marine sector.
Mark Robertshaw, managing director (Asia Pacific) with Faststream Recruitment, said: " We are not seeing much impact in terms of employment. There are more and more Singaporeans actually stepping up into these positions as the maritime and offshore sector. Education also supports that part."
Sembcorp Marine said the changes would be " challenging" . However, the firm is hoping to minimise the impact by raising productivity, and out-sourcing work to its overseas yards and partners.
The company is also building an integrated new yard in Singapore with improved logistics, better workflow and new automation. The new yard is expected to start operations in the second half of 2013.
Tang Kin Fei, group president and CEO of Sembcorp Industries, said: " With the Tuas yard, we are putting in facilities that will improve our productivity of doing our work. We believe we are able to meet the target set by the government."
Keppel and Sembcorp Marine currently employ close to 25,000 workers in their offshore and marine divisions.
-CNA/ac
Sembcorp Marine Bags $208M Jackup Deal with Perisai
by Quintella Koh Rigzone Staff
Sembcorp Marine disclosed late Thursday that its subsidiary, PPL Shipyard, has won a $208 million contract to build a second Pacific Class 400 jackup for Perisai.
Scheduled for delivery in 2Q 2015, the jackup is capable of operating in deeper waters of 400 feet and drilling high pressure and high temperature wells to depths of 30,000 feet. The jackup will be able to accommodate 150 people on board.
Sembcorp Marine delivered its first Pacific Class 400 jackup to Perisai in May last year.
" We are very pleased that Perisai has chosen to order the second Pacific Class jackup with us. This repeat order is a reflection of the optimism that the owner has in the jackup market," PPL Shipyard's Managing Director Douglas Tan said in a statement.
Analysts said this week that the outlook for Sembcorp Marine this year is optimistic.
" We see compounded annual growth rate earnings of 16 percent for Sembcorp Marine over the next three years, supported by its $11 billion orderbook," Maybank Kim Eng said in a research note Wednesday.
DBS Group Research noted Thursday that Sembcorp Marine's performance this year will offset an anticipated performance slack of parent company Sembcorp Industries.
The offshores were plagued by bearishness yesterday.
Sembmar suffered the most as it continues to slide further yesterday. However, Sembmar tested its support level of 4.40 and this support level might hold its price. If this level fails to hold, Sembmar will be aiming for the next support of 4.20 level.
Sembcorp also follow Sembmar to slide lower yesterday. Similarly, Sembcorp also hit its immediate support of 5.18 level and held well there. However, its weak earnings report yesterday might not be helpful to hold this support level. If this support breaks, Sembcorp will be testing its next support of 5.00 level.
Kepcorp failed to hold its 20ma support line yesterday and its uptrend momentum is now being compromised. If Kepcorp fails to recover above 11.60 level today, Kepcorp will be sliding downwards to 11.40 level.
Overall, the offshores are mostly trading close to their support level. If they fail to hold their support, further downside should be expected.
SMM: DMG insti note that wat is hurting Sembcorp though is the decline in margins that we have now seen since the sector peaked 3 qtrs ago, which was again reconfirmed in the recent result last wk. Gross margins have now declined from the peak of 21.8% in 4Q11, to 15.7% for the full year 2012, to only 12.6% in last quarter of 2012.
Even more telling is the guidance, which is for the margins to continue to fall, and they are now expecting only 10-11% for the coming qtrs. This of course filters down to the net profit margin as well. Trading on 17.1x FY2013 PE and with the disappointing dividend payout, house believe the stock is very fully valued, and worse still, given that the consensus street estimates remain too high (14-17% margins are still being forecast despite the mgt downgrade), think the entire sector should now be coming under pressure.
Whilst we still believe in the strength of the Jack up rig market, what we are seeing is a normalization of margins (much faster than even we expected) from the previous three years which had been boosted by record rig pricing.
Rig pricing is now slowing down and we believe this is attributing to the rising competition for offshore orders (especially from the Chinese, Middle East and Korean Yards which now appear to be pricing for volume rather than profits).
So whilst the order book remains healthy, margin prices are now the key.
Technically, Sembcorp is stuck in a declining wedge, and looks set to test the bottom of the range at the 4.10 level. A break of this support would clear the way for a retest of the $3.60 level which is more in keeping with historical valuations for the stock. Use the declining wedge top as a stop loss if it is broken.
The offshores were trading on the bearish side yesterday as they are lacking bullish momentum.
Kepcorp is the only one that continues to hold its uptrend movement well yesterday. Although Kepcorp did not manage to trade significantly higher, it still managed to hold strongly at its 20ma support line yesterday. However, its bearish divergence signal is of concern as it can reverse Kepcorp’s trend.
Sembcorp and Sembmar got battered down last Friday due to weak earnings. They continue to experience bearish pressure yesterday as they have formed downtrend movement after breaking their key support levels.
Sembcorp is reaching its support level of 5.18 level soon while Sembmar tested its support level at 4.42 level. Their bearishness is expected to continue to make them test the support levels.
Looks like the downtrend continues ....
I wish I am. What a tall hat you give......
iPunter ( Date: 25-Feb-2013 21:33) Posted:
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Sifu so lucky... anyway, good play... 
Andrew ( Date: 25-Feb-2013 21:28) Posted:
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Heng ah, I sold off at 475 last tue, imagine if I have asked for 476 - Tues Intraday 478.
For the rest of the week it drift downward.
iPunter ( Date: 25-Feb-2013 07:08) Posted:
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Possibly 4.20 may be a great price to enter a long position...
edchai ( Date: 25-Feb-2013 08:43) Posted:
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If according to chart pattern, what would good entry point? I am thinking to collect some.
Thanks.
Thanks.
This one is really pengsan... Good to short @4.56 if it rebounds ...
Andrew ( Date: 25-Feb-2013 00:25) Posted:
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I think it will get cheaper before it turn around. With mixed review from brokers, it is going to drift depending on market condition.
edchai ( Date: 22-Feb-2013 16:54) Posted:
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Looks like starting a down trend for Sembcorp Marine.
http://mystocksinvesting.com/singapore-stocks/sembcorp-marine/semb-marine-start-of-a-down-trend/
Still feel like it will go below 4.50 within this week.
Sembcorp Marine- 4Q12: Below expectations. Maintain HOLD. UOBKH tweak its target price marginally from S$4.90 to S$4.85
Sembcorp Marine: Receiving enquiries for drillships. Maintain BUY with S$5.84 fair value estimate by OIR
Sembcorp Marine: Margin Recovery Still Elusive Buy TP $5.40 by Maybank-Kim Eng
SembCorp Marine - Risk to margin recovery, FY13/14F earnings cut by 10%/9% downgrade to HOLD with lower TP of S$5.00 by DBS Vickers
Sembcorp Marine: Prudence cuts both ways. Downgrade to HOLD, TP lowered to S$5.00 - DBS Vickers
Thanks for sharing and will consider to buy if it below 4.50. Sounds good to mid-term investment.
Sembcorp Marine: Receiving enquiries for drillships
Sembcorp Marine (SMM) reported a 38.1% YoY rise in revenue to S$1.38b and a 27.0% fall in net profit to S$167.1m in 4Q12, bringing full year revenue and net profit to S$4.43b and S$538.5m, respectively.
Sembcorp Marine (SMM) reported a 38.1% YoY rise in revenue to S$1.38b and a 27.0% fall in net profit to S$167.1m in 4Q12, bringing full year revenue and net profit to S$4.43b and S$538.5m, respectively.
Excluding one-off items such as foreign exchange losses and disposal gains, core net profit of S$562m was in line with our expectations. Operating margin fell from 14.1% in 3Q12 to 10.8% in 4Q12, mainly due to lower margins from new design rigs, and a higher proportion of procurement in the business mix.
The group is seeing healthy enquiries for semi-submersible rigs and even drillships. SMM has secured new orders worth S$900m YTD, accounting for 20.3% of our full year estimate. Net order book is also strong at S$13.6b with deliveries till 2019.
Maintain BUY with S$5.84 fair value estimate, based on 16x blended FY13/14F earnings. (Low Pei Han/OCBC)
The group is seeing healthy enquiries for semi-submersible rigs and even drillships. SMM has secured new orders worth S$900m YTD, accounting for 20.3% of our full year estimate. Net order book is also strong at S$13.6b with deliveries till 2019.
Maintain BUY with S$5.84 fair value estimate, based on 16x blended FY13/14F earnings. (Low Pei Han/OCBC)
The offshores were also facing selling pressure yesterday. Kepcorp retraced slightly and return back to test its 20ma support line at 11.56 level. This retracement had reminded that its bearish divergence is still intact and probability of trend reversal is much higher now. This 20ma support line will be the key to determine whether the trend reversal would happen or not.
Sembmar and Sembcorp managed to hold their support level well yesterday as they are waiting for their earnings report. Sembmar could be in the limelight today as it had reported weaker earnings for last year. This report might create a negative impact on Sembmar’s price today. Hence, downward pressure can be expected to happen in Sembmar which might push it to as low as 4.60 level today.
Sembcorp might also catch the negative vibe from Sembmar today as they are closely related.
Sembcorp might be heading lower to test its immediate support level of 5.38 level. Overall, the offshores might trigger off further selling pressure after Sembmar’s poor earnings report.
SMM: weak FY12 results to margin pressures, below expectations.
Revenue was up 12% yoy to $4,430m, while net profit fell 28% yoy to $539m. Excl non-operating items (write back of tax over provision), net profit at $500m was down 29% yoy, below consensus est at $548m.
Operating margin declined sharply to 10.8% from 14.1% in 3Q12, below market expectation of 15.0%. Mgt attributed the fall in margin to conservative profit recognition for new pdts incl its first drillship unit.
Mgt maintained that 2013 OP margins could be 10-13%, below current mkt expectation of 13.2%.
This is driven by the start of profit recognition for more new pdts, incl the well intervention semisub and harsh environment semisub.
Deutsche notes, SMM is a new entrant in drillship construction, believes its upcoming yard in Brazil may face cost overruns, skilled labor shortages, construction delays and other initial teething issues.
Investors may be further disappointed by the lower dividends (final 6cts + special 2cts) vs this time last yr (final 6cts + special 14cts).
Total div for FY12 of 13 cts (2.7% yield) is almost half last yr’s total div of 25 cts. SMM has a net order book of $13.6b with completion and deliveries stretching into 2019.
At $4.73 last close, the stock trades at 18.3x P/E, 4.0x P/B.
Credit Suisse maintains at Neutral, cuts TP to $4.00 from $4.30.
Deutsche keeps at Hold with TP $4.75. Prefers Keppel Corp (Buy, TP $13.50).