Rig builders

Rig builders: Daiwa remains positive on rig builders. However, note that rig utilization-rate trends, seem to support the notion that sector remain in cyclical trough, albeit closer to the end than the beginning. This represents a firm consensus that supports view that industry recovery will not start in earnest until late 2011….

However, house positive on SG rig-builders, citing Petrobas again as the key share-price catalyst. Highlights Kep has nearly 90% chance of winning 4-8 rigs, while SembMar has slightly less than 50% chance of winning 7-9 rigs…..

Rates Keppel, SembMarine, SembCorp Industries at Outperform with TP of $10.27, $4.54 & $4.63 respectively. We see S$0.45 downside for Keppel and $0.23 for SembMarine if neither wins any contracts from Petrobras. Tip Petrobras to tender results in 4Q 2010, after Brazil presidential election 31 October.