SINGAPORE (Sept 11): There is little to worry from news that Keppel’s client Golar LNG is mulling the use of other shipyards to build future FLNG (Floating liquefied natural gas) vessels, say analysts.
Upstream, the global oil & gas news provider, recently reported that Golar is evaluating alternative shipyards to build future FLNG vessels.
Golar had mentioned that other shipyards may offer “more attractive payment terms and long-term financing packages” and that they “have confidence that a Chinese solution for FLNG is viable”.
To recap, Golar had contracted Keppel in 2014 and 2015 to convert its existing vessels Hilli, Gimi and Gandria into FLNG vessels.
Hilli Episeyo is currently operating off Cameroon for Perenco while Keppel said it was in discussions with Golar on FLNG conversion projects for the BP Tortue field which would likely require the use of Gimi,.
In a Monday report, OCBC Investment Research analyst Low Pei Han says while there has been some market worry for Keppel, it appears that the negotiations with non-Singaporean yards are based on using Golar’s Mark 2 design. Keppel’s work, on the other hand, involves the conversion of vessels.
As for Keppel’s property arm, it was disclosed last week that another plot of land in the Sino-Singapore Tianjin Eco-City (SSTEC) has been successfully bid for.
The plot is meant for residential use, with a total site area of 8.77ha.
This is the second plot of land sold in 2H18, and was won by Tianjin Yeshine Group at RMB 1.46 billion ($293.2 million).
This translates into about RMB 6,700 psm of GFA or RMB 166 million/ha.
Comparing the land price based on land area, the transacted land plot has fetched higher values than previous transactions.
However, on a GFA basis, the price is lower.
Low notes that the pricing for each plot varies according to the characteristics such as location and access to amenities, among other factors.
“We update our SOTP-based fair value and also account for the group’s latest sale of its direct stake in KDC REIT,” says Low, “As such, our fair value estimate slips from $8.70 to $8.38 or 5.6 times FY19 earnings.”
Year to date, shares in Keppel are down 15.5% to $6.36 on Tuesday morning.
