Keppel Last:6.49

+0.02

KepCorp vs SembCorp

Keppel Corp by RBS Smiley

Buy
Target price
S$13.50
Price
S$12.72

Keppel Corp

Standard Drilling buys Clearwater rigs Upstream reports that Standard Drilling is offering to buy out Clearwater's 2 jack- ups being built by Keppel and is likely to exercise the options for another 2 jack-up newbuilds soon. Positive for Keppel, but we prefer SMM. Event - Standard Drilling is likely to exercise 2 jack-up options with Clearwater.

! Upstream reports that Oslo-listed Standard Drilling has offered US$8.5m in cash and US$126m worth of shares equivalent to 30% of its shareholding in Clearwater for the pair of KFELS Mod V B Class jack-ups plus an option for another 2 rigs.

! Standard Drilling intends to exercise the option with Keppel - each rig is worth US$192m.

! The acquisition is expected to be completed by early May and the newbuild options will be exercised by mid-May, Standard Drilling said in a statement. Impact - Jack-up newbuild momentum to continue, Pemex wants 15 more...

! A total of 18 jack-ups and 7 FPSOs have been ordered ytd, bringing the total this year up to S$4.7bn, or 91% of our forecast.

! If we assume the 2 optional jack-ups with Clearwater are exercised, the total orders ytd is 100% of our full year assumption.

! Orders ytd have already exceeded total new orders for 2010 and we expect this momentum to continue, with potential Statoil and Aramco orders in the pipeline.

! If all options awarded are exercised within 2011, new orders would hit S$7.8bn, 50% above our 2011 forecast.

! We believe jack-up newbuild is likely to continue, given the replacement demand for older rigs and the pick-up in demand for new jack-ups.

Pemex announced that it will charter another 15 jack-ups to bring the total rigs working in the Gulf of Mexico to 40. Action point - we prefer SMM (S$7, 17% upside) to Keppel (S$13.5, 6% upside).

! We believe both SMM and Keppel’s shares will continue to re-rate in line with order flows.

! However, given delivery times have stretched to 2014 now for Keppel, SMM appears more competitive in winning near-term contracts, given its lighter orderbook. Ytd SMM has received orders equivalent to 30% of our 2011 order assumption of S$4.8bn (71% including existing options), whereas Keppel has already achieved 91% of our 2011 assumption of S$5.2bn orders (150% including options).

! Sembcorp’s shares are trading at 2011F PE of 23x and PB of 5.1x for ROE of 24%, vs Keppel, which is trading at 2011F PE of 17x and PB of 2.7x for an ROE of 15%.

! We prefer SMM Smiley

to KEP as:

1) SMM, the pure play, tends to outperform substantially when order momentum improves

2) it has only outperformed Keppel by about 5% ytd and

3) SMM is more competitive in near-term bids now that Keppel’s delivery times are stretched.

Standard Drilling buys Clearwater rigs

Tan Hwee Hwee

Oslo-listed Standard Drilling is pursuing an aggressive fleet expansion plan by offering to buy out two jack-up drilling units being built for New York-based Clearwater Capital Partners and declaring options for four more rigs with Singapore's Keppel Fels.

Standard Drilling has offered $8.5 million in cash and $126 million worth of shares equivalent to 30% of its shareholding to Clearwater for the pair of KFels Mod V B Class jack-ups plus an option for two similar rigs.

Standard Drilling also intends to exercise an option for two rigs attached to its November newbuild contract with Keppel Fels for a pair of jack-up rigs.

All four options have been declared at a total value of $768 million or $192 million per rig.

The transaction is subject to shareholders' approval and will be financed by $330 million of private share placement.

The Clearwater acquisition is expected to be complete by early May and a newbuild contract for the additional rigs will be signed by mid-May, Standard Drilling said in a statement.

The entire transaction when complete, will bring Standard Drilling's fleet up to seven newbuild jack-up rigs, due for delivery from July 2012 through May 2014.

The delivery schedules and the 20:80 payment terms of the newbuild contracts imply the merged fleet will be an attractive acquisition target for any " US driller in a hurry to replace its [older] fleet" , according to a Pareto Securities equity research note.

Pareto Securities is the joint lead manager in Standard Drilling's $330 million private equity placement.

Source: Upstreamonline.com 01:01 GMT 11. April 2011 | last updated: 01:01 GMT 11. April 2011

Soaring higher n higher...

Important Dates for Keppel shareholders to note:

19 Apr (Tues): KepLand 1Q results

20 Apr (Wed): KepCorp 1Q results - expect handsome 1Q dividend of ~15c (my guess only).

26 Apr (Tues): Div ex-date (26c) Bonus ex-date (1:10).

Between now to 26 Apr (ex-date), many good news will be released.....I'm heavily vested but BOSAYOR

master krisluke

dont u think it's too late to buy keppel now?

guess the correction will have to wait a little longer :/

good news? i havent even entered :x

krisluke ( Date: 03-Apr-2011 19:01) Posted:

rotijai, one good news for you... this time is from keppel corp, I mean O& M. Smiley

Keppel Corp: Unit Gets Rig-Building Contract Worth US$180 Million

SINGAPORE -(Dow Jones)- Keppel Corp. (BN4.SG) said Sunday its unit received a contract worth US$180 million from Jasper Investments Ltd. (FQ7.SG) to build a jack-up rig.

Keppel FELS Ltd. will deliver the rig--an optional order exercised by Jasper after its first order in December--in the first half of 2013, the company said in a statement. The rig will be able to operate in water depths of 400 feet, drill 30,000 feet deep and accommodate 150 men, it said.

-By Chun Han Wong, Dow Jones Newswires, +65 64154 160 chunhan.wong@ dowjones.com

rotijai, one good news for you... this time is from keppel corp, I mean O& M. Smiley

i am still waiting for the 2 to correct a bit before going in..

hopefully it will come soon :)

krisluke ( Date: 01-Apr-2011 22:51) Posted:

I tip singapore to win the lion share of rigs order. Singapore one become oil hub instead of financial hub for asia soon...

Why? china just snatch the " finanical hub" title from singapore Smiley

Anyway, it just an grandmother analysis only. Be happy always Smiley

I tip singapore to win the lion share of rigs order. Singapore one become oil hub instead of financial hub for asia soon...

Why? china just snatch the " finanical hub" title from singapore Smiley

Anyway, it just an grandmother analysis only. Be happy always Smiley

O& M: CIMB has comprehensive report on Sector. Maintain Overweight, with an estimated 40% of rig-order forecast for this yr being met. Estimate orders for 167 rigs globally from 2011 to 2013. House maintain order forecast but increase estimation for total spending to US$111b from US$74b over nxt 3 yrs as assumptions replace some semi-subs with drillships, given the latter’s growing popularity…..

SembMarine remains house top pick, tipping more order wins in the near term to boost its share price. See sector catalysts from a stronger order momentum and higher margins. House stand firm in belief that both SG and Korean yards will preserve their lion’s shares of the jack-up and drillship markets respectively over next 3 yrs…..

Note that Chinese rigs are not cheap, contrary to current wisdom. E.g the last premium jack-up rig that Seadrill ordered from Dalian Shipyard in Nov 10 cost US$190m, comparable to contract prices for Keppel and SMM, given similar construction durations…..

Add that recent channel checks with Daewoo Shipyard reveal that the Koreans do not rule out SG rig-builders as competitors in the drillship segment but not large-scale offshore equipment (FPSOs, FPSO-LNG, wind turbines etc). House believe it is a matter of time before operators start to source from SG for drillships as Korean yards get progressively booked out. Drillship deliveries from Korean yards have been stretched till 2014.

i would like to introduce my elliott wave expert CIMB to share their O& M analysis and research with keen forumers/Readers Smiley

buy and buy lah. I'm more bullish on sembmar than kepcorp. let's see who won the most RIGY...

rotijai ( Date: 31-Mar-2011 22:48) Posted:

yea i am interested. but how does this 'help' in investment ?

krisluke ( Date: 31-Mar-2011 22:35) Posted:

Rig builders: Recent demand in the O& M sector has largely been shallow-water focused with the bulk of orders for jackup rigs. But demand for deepwater units could come next, extending the recent order momentum for rig builders. This comes on the back of recent approvals in the Gulf of Mexico (GOM) for the resumption of work by Noble, BHP, ExxonMobil, and ATP. Shell most recently became the first to obtain approval for a plan to drill new wells…

Meanwhile news flow on other fronts has been positive as well. Rig players such as Pacific Drilling, Sevan Marine, Seadrill, Petrobras are looking to, or have raised funds to invest in more drilling units. In particular Maersk, Seadrill have given strong indication that they are planning to expand their deepwater fleet. In addition, Petrobras sees oil prices rising, and has revised its 5-yr investment plan to include as much as US$10b spending on its new deepwater fields…

All this bodes well for the offshore sector, which Deutsche remains bullish on. Says that unlike the last boom in 2005-08, where there was substantial Norwegian speculation, the bulk of new orders this time are coming from established drillers, indicating a more sustainable trend. Sees Keppel Corp and SMM having a potential addressable market for jackups worth US$10-20b, and for semi-subs worth US$8-17b over the medium term. Reiterates Buy on Keppel (TP $14.20), SMM (TP $7)…

We highlight Cosco as a beneficiary too, as the company shifts gears to its offshore marine business from its bulk carrier building business. Recall the co recently announced 2 pending rigbuilding deals worth a combined US$1.2b, and is in the midst of developing 2 types of semi-sub offshore vessels to diversify its range of vessels.

ang mo package was damn ATTRACTIVE. I mean not many joby offer 3 digit ($, in million) type of contract, for example construction and manufacturing sector.

BUT, If I analyse further and deeper, They had no much choice either. The reason is quite direct and obvious, USA still relied on QE (bonds buying from FED) to remain inflate. I read an interesting article says that USA demand for oil may be down and china going for nuclear energy (clean energy) to save the ozone. The gobal thirst for OIL is still beyond the advancement of other source of alternative energy. OIL can be cheap on the other hand.

Thinky pray that no contract will be cancelled that happen in my old " profit" days Smiley

It good to trade oil related becos its an essential need for the world.

Japan Nuclear energy was built in 1960s. btw, why other countries, eg singapore did not follow this trend setting??? Smiley

Oil Speculator in my dictionary, is me. nothing else.

The DIRECTOR is a oil speculator? ?? OH NO, REALLY TO SHORT Smiley

MY " SHIFU" advice " BB" action.

krisluke ( Date: 01-Apr-2011 21:02) Posted:

The best TA chart is those related to OIL.

Btw, 1Q closed liao, Next week will be the real TEST for WORLD NUMBER 1 & 2 OIL SPECULATOR Smiley

Trade with care and be HAPPY ALWAYS Smiley

The best TA chart is those related to OIL.

Btw, 1Q closed liao, Next week will be the real TEST for WORLD NUMBER 1 & 2 OIL SPECULATOR Smiley

Trade with care and be HAPPY ALWAYS Smiley

yea i am interested. but how does this 'help' in investment ?

krisluke ( Date: 31-Mar-2011 22:35) Posted:

Rig builders: Recent demand in the O& M sector has largely been shallow-water focused with the bulk of orders for jackup rigs. But demand for deepwater units could come next, extending the recent order momentum for rig builders. This comes on the back of recent approvals in the Gulf of Mexico (GOM) for the resumption of work by Noble, BHP, ExxonMobil, and ATP. Shell most recently became the first to obtain approval for a plan to drill new wells…

Meanwhile news flow on other fronts has been positive as well. Rig players such as Pacific Drilling, Sevan Marine, Seadrill, Petrobras are looking to, or have raised funds to invest in more drilling units. In particular Maersk, Seadrill have given strong indication that they are planning to expand their deepwater fleet. In addition, Petrobras sees oil prices rising, and has revised its 5-yr investment plan to include as much as US$10b spending on its new deepwater fields…

All this bodes well for the offshore sector, which Deutsche remains bullish on. Says that unlike the last boom in 2005-08, where there was substantial Norwegian speculation, the bulk of new orders this time are coming from established drillers, indicating a more sustainable trend. Sees Keppel Corp and SMM having a potential addressable market for jackups worth US$10-20b, and for semi-subs worth US$8-17b over the medium term. Reiterates Buy on Keppel (TP $14.20), SMM (TP $7)…

We highlight Cosco as a beneficiary too, as the company shifts gears to its offshore marine business from its bulk carrier building business. Recall the co recently announced 2 pending rigbuilding deals worth a combined US$1.2b, and is in the midst of developing 2 types of semi-sub offshore vessels to diversify its range of vessels.

Key Dates:

1859: The first dock is built in Singapore's New Harbour (later Keppel Bay).
1913: Singapore Harbour Board, which becomes Port of Singapore Authority after the country's independence, is created.
1968: Singapore Drydock and Engineering Co. is established to take over Drydock Department of Port of Singapore Authority the company adopts the name Keppel Shipyard.
1971: Shipbuilding group FELS is acquired.
1975: Keppel goes public on the Singapore Stock Exchange.
1983: The company acquires Straits Steamship Ltd., which provides an entry into property development, later forming the basis for Keppel Land and infrastructure subsidiary Keppel T& T.
1986: The company changes its name to Keppel Corporation.
1990: Keppel enters the United States with the acquisition of a shipyard in Brownsville, Texas the company acquires Asia Commercial Bank, which becomes Keppel Bank.
1998: Keppel Bank merges with Tat Lee Bank amid a restructuring of operations.
1999: The company merges Keppel Shipyard with Hitachi Zosen, which becomes Keppel Hitachi Zosen.
2002: The company acquires full control of Keppel Hitachi Zosen, which is integrated into the newly established Keppel Offshore & Marine, as well as Keppel FELS and KFEI.
2003: Keppel enters Kazakhstan with the creation of an offshore engineering and construction subsidiary.
2004: Keppel spins off the Investments division to refocus around a core of Offshore & Marine, Property, and Infrastructure.

will the steep up trend for keppel corp be violated? let's see.

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Keppel Corp Technical Analysis