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Fw: SG: MARKET PULSE: ,Oil & Gas Sector Yoma, KepCorp, Nam Cheong (28 Mar 2013) | | | | | | MARKET PULSE: Oil & Gas Sector, Yoma, KepCorp, Nam Cheong
28 Mar 2013
KEY IDEA
Oil and Gas sector: Takeaways from IHS Petrodata’s seminar
We recently attended IHS Petrodata’s seminar on the offshore oil and gas sector, and came away feeling positive on prospects of selected
sub-segments of the industry. For the deepwater drilling market, day rates have recovered to 2008 levels, especially the ultra-deepwater segment.
Rates for harsh-environment rigs have also been climbing. 2013 is also expected to see the development of more global oil and gas field projects,
while sentiment on the OSV market has generally improved. In particular, average earned day rates in Asia Pacific are showing signs of an upturn,
especially for AHTS vessels smaller than 6,000BHP in Indonesia and Malaysia. Maintain Overweight on the broader oil and gas sector, with Ezion
Holdings [BUY, FV: S$2.33], Keppel Corporation [BUY, FV: S$12.68], Sembcorp Marine [BUY, FV: S$5.84], and Nam Cheong [BUY, FV: S$0.30] as our
preferred picks. (Low Pei Han, Chia Jiunyang)
MORE REPORTS
Yoma Strategic Holdings: Moving into luxury tourism
Yoma Strategic Holdings (Yoma) reported that it would take a 70% stake in Chindwin Holdings which would acquire several connected tourism assets.
First, Chindwin would acquire 75% of a balloon tour company “Balloons over Bagan (BOB)” for US$10.7m. BOB is the only hot air balloon operator in
Myanmar and has had a profitable track record since it began operations 13 years ago. We understand that this acquisition price translates to a
forward PE multiple of 6 to 8 times. In addition, Chindwin would acquire a 75% stake in 21.2 acres of land in Bagan for US$3.75m. This acquisition
is conditional on the present owner converting the existing land-rights to allow for the construction and operation of a hotel business. Overall we
see these acquisitions to be positive and allows Yoma to capitalize on the burgeoning demand for luxury tourism in Myanmar. While we believe the
company holds meaningful franchise value as a leading developer in Myanmar, most positives are likely priced in at current prices. Maintain SELL
with a 12-month fair value estimate of S$0.71 (20% premium to RNAV). (Eli Lee)
Keppel Corporation: Good demand from Mexico; secures four more jack-ups
Keppel Corporation (KEP) announced that it has secured contracts to build four jackup rigs worth US$820m for Mexican drilling company, Grupo R. The
rigs will be built to KEP’s proprietary KFELS B Class design and are scheduled for delivery progressively from 2Q15 to 4Q15. Recall that KEP also
secured contracts to build two similar rigs for PEMEX in Dec last year for US$420m. As mentioned in our earlier notes, the strong demand coming from
Mexico is within our expectations, as PEMEX plans annual capital expenditures of ~US$30b till 2019 to stem the country’s declining oil production.
We see KEP as one of the beneficiaries of these developments. The group has secured new O&M orders worth about S$1.6b YTD, accounting for ~32% of
our full year estimate. Maintain BUY with S$12.68 fair value estimate on KEP. (Low Pei Han)
Nam Cheong Ltd: US$72m contract for six vessels
Nam Cheong Ltd announced that it has sold six vessels worth a total of US$72m to two of its existing customers. Two 5,150 bhp Anchor Handling Towing
Supply (AHTS) vessels are sold to Icon Offshore Berhad – one of Malaysia’s largest OSV group, while four Emergency Response and Rescue Vessels
(ERRVs) will be sold to a Singapore-based company for deployment to the North Sea. The vessels are scheduled for delivery between 2Q13 and 4Q14. We
currently have a BUY rating and S$0.30 fair value estimate for the counter. (Chia Jiunyang)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- US stocks finished with limited losses on Wed, with the S&P 500 Index stalled just points from its record close, as worries over Europe’s debt
troubles abated.
- Singapore expects overseas visitor arrivals to grow at a slower pace of between 2.8% and 7.6% this year, hurt by a tight domestic labour market.
- Demand for office space remained healthy in 1Q13, with occupancy rates edging up 0.4ppt to 95.4% amid a sluggish economy, according to DTZ.
- Second Chance announced that its net profit tumbled 42.4% YoY to S$3.02m due to a sharp drop in fair-value gain on investment properties.
- RH Energy is making progress with its plans to mount a reverse takeover of Chinese property developer, Chiwayland Group (Singapore) Pte Ltd.
- Japanese real estate firm Tosei Corporation, which has a primary listing on the Tokyo Stock Exchange, has found its way to the SGX through a
secondary listing.
- Mapletree Industrial Trust will develop a plot of land in one-north into a data centre for lease to Equinix Singapore.
- Yanlord Land Group Ltd had its rating outlook revised to stable from negative by Standard & Poor's Rating Services. | |
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