COSCO: Could see positive interests, after announcing that Seadrill has exercised an option to construct a new tender drilling rig T-17 valued at US$66m. Seadrill has now exercised one of the options awarded by Cosco. Rig is scheduled for delivery in 1Q13 and contract is not expected to have a material impact on grp’s EPS and NTA for 1Q11…..
Contract wins brings YTD orders secured to US$2.76b, and grp’s orderbook to approximately US$7.3b vs FY10 Rev of US$3.07b, under pinning earnings till 2013/14. Citi has Buy Call on grp with $3.00 TP. Note that fundamental recovery is not yet fully priced in and raise estimates by 10-11% over 2011/12E pegged to 21x mid FY12E P/E. Add that consensus underestimates the pace Cosco is transitioning into a credible O&M play. CIMB however remains neutral on grp with $2.38 TP.
Wednesday, April 13, 2011
Offshore
Offshore: The back drop for the offshore sector continues to be positive for the long term, with bidders offering Petrobras daily rates of US$638k-740k/ day for deep water drilling rigs. Petrobras had expected to rent the rigs for US$500k/day, leading it to cancel its tender for 4 drilling units, and consider changing contract regulations to hire foreign built rigs to reduce costs…
However, the 4.8% pullback in Brent futures to US$120.69/barrel since the start of this wk may put a lid on stock prices of rig builders in the near term. The IEA said that oil prices above US$100/barrel are starting to hurt the global economy and Goldman Sachs forecast a “substantial” correction in Brent to US$105, as the oil market has adequate inventory and OPEC spare production capacity.
However, the 4.8% pullback in Brent futures to US$120.69/barrel since the start of this wk may put a lid on stock prices of rig builders in the near term. The IEA said that oil prices above US$100/barrel are starting to hurt the global economy and Goldman Sachs forecast a “substantial” correction in Brent to US$105, as the oil market has adequate inventory and OPEC spare production capacity.
Keppel Corp
Keppel Corp: lands new contracts worth $240m.
Under one contract, Keppel will build a prototype multi-purpose dive support construction vessel (DSCV) for SBM Offshore, to be delivered in 2Q13. SBM is a long time customer of Keppel, with completed contracts involving 13 FPSO completions, and 4 FPSO conversion projects in progress…
In another contract, Keppel has received a fast-track project for the upgrading of an FPSO vessel from Petrofac Int’l (UAE) for which work commenced in 1Q. Designated for an oil and gas field offshore Peninsular Msia, this FPSO facility will be able to handle both oil and gas pdtn.
Keppel’s ytd order book wins now stand at $4.9b, making it on track to meeting Street expectations of up to $7b worth of orders for this yr...
The Street has mainly Buy ratings on the stock, with recent TP ranging btwn $13.92 – 15.10.
Under one contract, Keppel will build a prototype multi-purpose dive support construction vessel (DSCV) for SBM Offshore, to be delivered in 2Q13. SBM is a long time customer of Keppel, with completed contracts involving 13 FPSO completions, and 4 FPSO conversion projects in progress…
In another contract, Keppel has received a fast-track project for the upgrading of an FPSO vessel from Petrofac Int’l (UAE) for which work commenced in 1Q. Designated for an oil and gas field offshore Peninsular Msia, this FPSO facility will be able to handle both oil and gas pdtn.
Keppel’s ytd order book wins now stand at $4.9b, making it on track to meeting Street expectations of up to $7b worth of orders for this yr...
The Street has mainly Buy ratings on the stock, with recent TP ranging btwn $13.92 – 15.10.
SG Market
SG Market: Spore shares are likely to track overnight weakness on Wall Street, to extend their consolidation into a 3rd straight session. With the STI market still very much in overbought territory & weighed by fresh concerns from Japan over its stricken nuclear reactors, the market is expected to head towards support at the 3120 region.
A break of that key support may take the index down to 3080, where both the 20 & 50-day MAs are converging. On the upside, resistance will be met at 3187 followed by 3220. Watch for Keppel Corp. (BN4.SG), which may gain after saying late Tuesday its unit got offshore and marine contracts worth S$240 million in total.
Stocks in focus:
*KepCorp secures $240m worth of contracts from SBM Offshore & Petrofac, taking total orders clinhed so far this yr to $4.9b & putting it on target to exceed record $7.4b orders achieved in 2007.
*Cosco wins another tender barge contract from Seadrill, valued at est US$65m. The new unit, T17, is scheduled for delivery in 1Q13.
*Lian Beng more than doubles 9MFY11 net profit to $36.6m on 58% growth in revenue to $380m.
*UE awarded tender for 18.6k sqm land at Bendemeer Rd/Whampoa East for $543m by HDB. The 99-yr site is within walking distance from Boon Keng MRT & can be developed into a waterfront condo of 700 units.
*TTJ Intl has secured $29m worth of contracts, boosting its order book to $169m. The contracts comprise of a $25m contract to construct a new ITE HQ in Ang Mo Kio, steelworks in Samsung-Tiong Seng's JV Connexion project & replacement of a shiplift system.
*HPH Trust - Stabilising activities has ceased as over-alloted 540m units have been fully utilised as of 12 Apr 2011
*UFS auditors flags net loss of US$47.2m & co is in net current liability position of US$62.1m.
A break of that key support may take the index down to 3080, where both the 20 & 50-day MAs are converging. On the upside, resistance will be met at 3187 followed by 3220. Watch for Keppel Corp. (BN4.SG), which may gain after saying late Tuesday its unit got offshore and marine contracts worth S$240 million in total.
Stocks in focus:
*KepCorp secures $240m worth of contracts from SBM Offshore & Petrofac, taking total orders clinhed so far this yr to $4.9b & putting it on target to exceed record $7.4b orders achieved in 2007.
*Cosco wins another tender barge contract from Seadrill, valued at est US$65m. The new unit, T17, is scheduled for delivery in 1Q13.
*Lian Beng more than doubles 9MFY11 net profit to $36.6m on 58% growth in revenue to $380m.
*UE awarded tender for 18.6k sqm land at Bendemeer Rd/Whampoa East for $543m by HDB. The 99-yr site is within walking distance from Boon Keng MRT & can be developed into a waterfront condo of 700 units.
*TTJ Intl has secured $29m worth of contracts, boosting its order book to $169m. The contracts comprise of a $25m contract to construct a new ITE HQ in Ang Mo Kio, steelworks in Samsung-Tiong Seng's JV Connexion project & replacement of a shiplift system.
*HPH Trust - Stabilising activities has ceased as over-alloted 540m units have been fully utilised as of 12 Apr 2011
*UFS auditors flags net loss of US$47.2m & co is in net current liability position of US$62.1m.
Tuesday, April 12, 2011
Informatics
Informatics: According to Reuters, M’sian tycoon Vincent Tan is mulling a 49% stake sale in the unlisted gaming unit of Berjaya Sports Toto for approximately US$1b including debt. Tan has hired Citigroup as adviser to the deal. Carlyle Group & Providence Equity Partners were 2 of those recently approached to buy the stake but it is unclear whether the buyout funds are proceeding with the process.
Would Tan consider injecting its gaming biz into Informatics, which is 30.3% controlled by the Berjaya Group & 20.9% by Peter Lim? Or do a RTO at Rowsley where Peter Lim owns a 29.9% stake? The guessing game is on.
Would Tan consider injecting its gaming biz into Informatics, which is 30.3% controlled by the Berjaya Group & 20.9% by Peter Lim? Or do a RTO at Rowsley where Peter Lim owns a 29.9% stake? The guessing game is on.
Midas
Midas: Announced that it will invest Rmb600-650m in a new plant in Henan Province. Plant will include 2 aluminium alloy extrusion production lines, one downstream fabrication line, auxiliary machinery, land, buildings and other infrastructure. Construction is expected to be completed in 2H 2012….
With new capacity, Grp’s total annual extrusion production is set to increase by 40% to 70,000 tonnes. Its downstream fabrication capacity will also increase by 30% from to 1,300 train cars. New production plant will be funded by proceeds raised from grp’s HK secondary listing and internal resources. Developments are not expected to have a material financial impact on grp for FY11.
With new capacity, Grp’s total annual extrusion production is set to increase by 40% to 70,000 tonnes. Its downstream fabrication capacity will also increase by 30% from to 1,300 train cars. New production plant will be funded by proceeds raised from grp’s HK secondary listing and internal resources. Developments are not expected to have a material financial impact on grp for FY11.
YangZijiang
YangZijiang: Announced that it had entered six shipbuilding contracts in Mar11 with contract value of US$214.2m. Contracts comprise two 82,000 and two 10,000 DWT bulk carriers and two 4,800 TEU container ships. Vessels scheduled for delivery from 2012 to 2013. In dry bulk segment, grp sees end users in China investing to build up vessel fleet and lower reliance on charterers…..
Deutsche note that current low BDI level, if sustained, could prompt demolitions to accelerate in coming years. Expect 30-yr high dry bulk demolitions in 2011 and 2012. Apart from high demolition tonnage, expect consolidation within the sector to further reduce supply and benefit large shipyards. Note that small shipyards are under threat of being taken over or going bankrupt as they face order cancellations, high gearing, and poor cash flows…..
YTD, YZJ has secured 14 shipbuilding contracts totaling US$512.3m. House FY11-13E new order forecasts are US$2.5b, US$3b and US$3.5b respectively. Add that grp had signed a LOI with Seaspan Corp to build 22 units of 10,000 TEU containerships worth over US$2b. If LOIs are confirmed, YZJ's new orders YTD could total around US$2.5b. CIMB and Deutsche has Buy Call on grp with TP of $2.69 and $2.31 respectively.
Deutsche note that current low BDI level, if sustained, could prompt demolitions to accelerate in coming years. Expect 30-yr high dry bulk demolitions in 2011 and 2012. Apart from high demolition tonnage, expect consolidation within the sector to further reduce supply and benefit large shipyards. Note that small shipyards are under threat of being taken over or going bankrupt as they face order cancellations, high gearing, and poor cash flows…..
YTD, YZJ has secured 14 shipbuilding contracts totaling US$512.3m. House FY11-13E new order forecasts are US$2.5b, US$3b and US$3.5b respectively. Add that grp had signed a LOI with Seaspan Corp to build 22 units of 10,000 TEU containerships worth over US$2b. If LOIs are confirmed, YZJ's new orders YTD could total around US$2.5b. CIMB and Deutsche has Buy Call on grp with TP of $2.69 and $2.31 respectively.
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