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Singapore’s rig builders are mostly lower with Keppel (BN4.SG) off 0.9% at $11.30, SembCorp Marine (S51.SG) down 1.1% at $5.28, while SembCorp Industries (U96.SG) is flat at $5.20.
Today’s underperformance could in part be down to oil prices tumbling below US$90/bbl ($116.2) Tuesday, settling 2.4% lower at US$89.38/bbl on Nymex; DBS Vickers says these offshore yards “offer the highest correlation to oil prices, spurred by the fleet renewal cycle, and rise in exploration and production spending.”
Today’s underperformance could in part be down to oil prices tumbling below US$90/bbl ($116.2) Tuesday, settling 2.4% lower at US$89.38/bbl on Nymex; DBS Vickers says these offshore yards “offer the highest correlation to oil prices, spurred by the fleet renewal cycle, and rise in exploration and production spending.”
All 3 stocks also enjoyed steep gains since Christmas, so some profit-taking is also likely in play. However, DBSV says the wheel of fortune has turned in offshore yards’ favour; it expects stronger order flow into 2011.
Notes catalysts such as strong demand for jack-ups, semi-submersibles; successful penetration into the drillship market and the potential award of Petrobras tenders by 1Q2011.
It says KepCorp, SembMarine and Cosco Corp (F83.SG) are its top picks; they are all rated Buy.
