Keppel Limited

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#61
Not sure why the trading volume is increasing and price holding very well in the face of sell down in oil and rig operators that are both clients of Semb Marine and kim Heng also.

I can understand that rig operators face direct risk from oil Co. and thus their price plunged close to 45-50%. Wow Seadrill now trades at a dividend yield of 14%.

What should the price of Keppel be if price of their clients and oil keep dropping? Very strong counter indeed.
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#62
Why? People still believe there is plenty of opportunities out there, where?

http://www.fool.com/investing/general/20...-to-p.aspx

In the 70s when the world 1st experience a major oil crisis, any one and everybody wants to build rigs, in fact the beginning of an offshore oil boom. Marathon Oil wasnt Marathon, it was a rig designer moth into a rig builder and the later part an Oil Co.

Why be at the bottom of the food chain when it can obviously move up the value chain. The Marathon jack-up was the industry standard. It still is the standard in efficient design and very price competitive - its like Apple and never goes out of fashion to people using the Marathon rig!

The booming cycle after the oil crisis lasted so long, that too much speculative new built went bust.

Why would this time be any different when the built cost were so high and energy price just keep dropping.

Some 1 said shale oil is not cheap, so is tar sand, but for every generalization, some where out there, there are capax that were already sunk and the oil/gas flow is a huge gusher that continue to be pumped out of the ground at highly lucrative price. So why wouldn't the Co. pump it out to spent on capax. Its a commodity and not that difficult to forecast.

What is difficult now is those mountain of debt to be paid with lower charting rate and the maths is pretty tricky with oil dropping by the second.

There is no rescue from Central bankers if oil deflate further as it means the central bank is happier to increase interest rate sooner which will only add to the pain of risky rig speculators.

I see yesterday temporary push up.... and sadly it close down instead and the pain will just keep coming for the most ardent fund holding it for dividend yield.

The most clear idea is get out now while the big volume selling is keeping it up.... it will be too late once news of impending rig default comes knocking.

I have my doubt this time it will be any different after such a prolong rally in rig cycle. At some point, everything will revert to normal. That is why the oil Co. never own any asset unless its a sure producing 1.
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#63
I think commodity prices are actually notoriously difficult to forecast because the profits gets rechanneled into capex and it becomes a feeding frenzy until margins suddenly collapse on supply. Iron ore is a good case study.

The term capex is also generalization. For example an exploration well is not the same as production well. The former is variable cost the latter is sunk cost
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#64
Oil have fallen over 20%
as a result kep corp fell from its high of 11.38 to the current 9.90
I think kep corp is a pretty diverse company
Besides the offshore and marine business, they also do pretty well in areas such as infrastructure and property
at 9.90 the FY15 PE is about 12 times with a dividend yield of 4.5%, pretty decent for a solid blue chip
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#65
In case people are wondering why is Keppel falling despite brokers saying buy, buy buy - we might want to look at what the analysts have forecasted (which affects their target prices) for Keppel this year. If I am not wrong, its >USD6bn orderbook wins. Keppel did USD7bn in 2013. So far this year it has only done USD3.6bn. Pretty far from USD6bn.
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#66
I didn't even bother with the contract win...

All I know is that the O&G cycle has been extended in the sense of the support industry. Hence, it will have to end somewhere.

I am not doubting Kep Corp's track record but its essentially a conglomerate with largely a portfolio of cyclical industry.

On its core O&M sector for Kep Corp to take a stake in a product that they are designing or build without a contract is indicative of softening industry conditions. If conditions are booming, there is no need to engage in speculative builds to showcase one's ability as they will be overwhelmed to cope with customers' demands.

Anyway, during a super cyclical downturn, you can be rest assured of bargain hunters testing their mettle.

Odd Lots Vested
GG

(18-10-2014, 10:32 PM)whatamidoing Wrote: In case people are wondering why is Keppel falling despite brokers saying buy, buy buy - we might want to look at what the analysts have forecasted (which affects their target prices) for Keppel this year. If I am not wrong, its >USD6bn orderbook wins. Keppel did USD7bn in 2013. So far this year it has only done USD3.6bn. Pretty far from USD6bn.
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#67
This reflects very well on global slowdown. I would say we are entering a period of deflation soon. Orders for keppel could dry up even more next year. Especially if oil hits 60

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#68
I will take you on for 60. I don't think it will happen as the amount of consumption is definitely much higher now historically.

U are way too pessimistic my dear... you should start to hide your $ under the pillow as no financial institutions will be safe under your predictions.

GG

(19-10-2014, 10:21 AM)BlueKelah Wrote: This reflects very well on global slowdown. I would say we are entering a period of deflation soon. Orders for keppel could dry up even more next year. Especially if oil hits 60

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#69
Don't need to wait for OPEC to cut supply. The US producers will be cutting supply when WTI crude falls to the 70s.
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#70
I was reading about the new "can do" ship that can explore and drill and "supposedly" reduce cost of production for oil and Gas.

I thought that might be a game changer. Although it is too small to make a impact when the tide turns but if it become a new industrial norm, maybe it will survive the down cycle better. Also, If I am not wrong, with the exception of bulk and containers shipping, down cycles are usually shorter than up cycles??

Just monitoring all the all players in O and G like Keppel and Sembcorp. Sorry for my Noobish thoughts
life goes in cycles, predictable yet uncontrollable; just like the markets, but markets give you a second chance
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