We hosted a two-day regional oil & gas event in Kuala
Lumpur and Singapore last week. Six Singapore companies were in the list –
Keppel Corp,
Sembcorp Marine,
Nam Cheong,
Pacific Radiance,
RH Petrogas
and
Rex International.
Key takeaways:
i) While drillers like Seadrill and
Transocean are guiding for a softer charter rate outlook for deepwater drilling in
2014-15, Singapore yards are well positioned to ride through the cyclicality given
a combined net order book of SGD30bn, with deliveries up to 2019. We prefer
SMM over KEP.
ii) RH Petrogas (BUY; TP: SGD1.23) expects a decision for
North Klalin in 2Q14 and a positive outcome could drive a re-rating.
iii) Nam
Cheong (BUY; TP: SGD0.48) is looking at
new fuel saving designs but recent
comments from Petronas’ president that the Malaysian OSV market is
oversupplied could dampen sentiment on the stock.
iv) Pacific Radiance (BUY;
TP: SGD1.30) is studying new markets like Mexico and Middle East and we think
the pace of fleet expansion could surprise on the upside.
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