Thursday, December 3, 2015


Oil: WTI dips below US$40 a barrel
The offshore and marine sector and oil & gas services firms are generally in negative territory today, following the fall in crude prices overnight.

Spot WTI dipped 4.6% to below US$40 a barrel after the weekly EIA report showed an unexpected 1.2m barrel rise in crude supplies.

In addition, the selloff was exacerbated ahead of the OPEC meeting this Fri in Vienna, as the street expects the cartel not to cut production.

With plunging utilisation rates, order standstills and cancellations from a rig oversupply and weak demand situation, the street appears to be scrambling to lower their earnings estimates for the O&M players, particularly for Sembcorp Marine.

In the past month, 10 out of 23 analysts cut their earnings estimates on Sembcorp Marine for FY15, bringing consensus estimates down by 20% to $0.145/share.

Meanwhile, Keppel Corp is still relatively unscathed from the earnings downgrade cycle at this point, and remains the street favourite.

Keppel Corp has 8 Buy, 13 Hold and 2 Sell ratings with a TP of $7.90.

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