Multi-year bull cycle awaits Singapore offshore & marine companies as demand for rigs expected to be strong from 2011-2013, says CIMB.
Forecasts orders for 167 rigs worth combined US$74 billion ($96.8 billion), including orders from Petrobras, to be placed globally in next 3 years.
While Singapore market consolidates during year-end lull, stocks in offshore & marine, commodities, hospitality sectors could outperform, says DBS Vickers.
Expects Keppel (BN4.SG), SembMarine (S51.SG), Cosco (F83.SG) to benefit from higher capex as oil majors increase exploration & production activity in 2011.
Amid USD weakness, strong demand from China, house tips CPO prices to resume uptrend from end-2010 through to 1Q11, in turn benefiting commodity plays like Indofood Agri (5JS.SG), First Resources (EB5.SG); says supply shortage arising from seasonal fall in yields in January-February next year, plus potentially lower soybean yields due to La Nina effect, could further fuel shares of such companies.
On hospitality front, expects Genting Singapore (G13.SG), SIA (C6L.SG), UOL (U14.SG), CDL Hospitality (J85.SG) to gain from robust Singapore tourist-arrivals; “we expect the peak year-end holiday season for 2010 to be stronger than prior years with Universal Studios @ Sentosa to be the main crowd puller for tourists.”
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Citigroup says drivers emerging for sustained upswing in offshore & marine sector; “a strong pickup in rig demand, strength in FPSOs and high margin rig upgrade suggests the orderbook has troughed and is poised for recovery.”
Tips contract wins could double in 2011-2012 vs 2010, reach $4.5–$5 billion.
“Should Petrobras wins materialise, a level above the 2007-2008 peak cycle would be possible.”
ASL Marine Holdings (A04.SG) is up 0.6% to 90.5 cents after company announces new shipbuilding contract worth $38.5 million.
DMG notes latest contract win by ASL Marine has come on the heels of a slew of other contract wins by other offshore & marine (O&M) players such as Ezra Holdings (5DN.SG), Keppel Corp. (BN4.SG) and Swiber Holdings (AK3.SG).
Singapore shares head lower as bearish Wall Street cues, continued worries over Europe debt troubles keep buyers at bay.
The STI is down 0.5% to 2,680.24 as at 9:48 a.m. with near-term support tipped at yesterday’s intraday low at 2,665.
“We’ve moved into a phase of lower lows and lower highs, the mentality at the moment is to trim stakes on any rebound,” says a trader at a local house, according to Dow Jones Newswires.
Keppel Offshore & Marine, through its subsidiaries Keppel Shipyard and Keppel FELS, says it has secured contracts worth $160 million for a Floating Production Storage and Offloading (FPSO) vessel conversion, a Derrick Lay Barge completion and the life extension of a semisubmersible rig.
The first contract was secured by Keppel Shipyard for the conversion of an FPSO from Emas Offshore Construction and Production (EOCP), a subsidiary of EOC.
