Any reason why you guys so confident about Keppel Corp? Just curious

Monday can standby grab DBS or KEPPEL CORP?

http://www.businesstimes.com.sg/companies-...rket#xtor=CS1-3

JUL 29, 20165:50 AM
Singapore

SWIBER Holdings sent shock waves through the offshore marine, banking and stock markets on Thursday after it applied to the courts to be wound up.

The move battered the share prices of several O&M counters and sent analysts scurrying to update their reports on companies in the sector. Among banks, DBS appears to bear the heaviest burden with an exposure of S$700 million to the Swiber group.

In addition to DBS, the major creditor banks to Swiber are Bank of America-Merrill Lynch, Citibank and Deutsche Bank. Citi said that its exposure was minimal and manageable. UOB also said that its exposure was manageable.


http://www.businesstimes.com.sg/stocks/hot...knock-on-effect

This post has been edited by elea88: Jul 30 2016, 10:23 AM

Hi MoneyMaker,... you have a nice avatar,... I believed, at the end of the day, Keppel Corp is still a good company to invest into. There is a 'mispricing event' in the market now, when it comes to KepCorp. This is the opportunity to go into Keppel Corp.

I'll still opt for KepCorp,....

Hans,

Why do you say there is a mis pricing for Keppel corp at the moment?

Hi prophet,... the events we are currently seeing are creating a lot of fear, more than necessary for the investing public. Multi-business companies such as KepCorp is not spared. Hence, I term it as just mispricing, because the SP of KepCorp should not drop so much,...analysing against previous economic downturns, and against the recent rise of oil price.

Thanks Hansel.

Correct me if I'm wrong. I think Keppel Corp is like Berjaya Corp in Malaysia where they have alot of subsidiaries and is very hard to determine the intrinsic value of the group itself.

Maybe you could quantify your fair value of Keppel Corp?

Oil is nearing $40 again. As i understand K Corp has NO new order for conversions this year. That's how bad it's turning.

Don't misjudge how bad this low price oil environment has become. The banks are Totally risk adversed to O n G sector. They do not want to lend to this sector till they see oil price UP. this is from my recent experience.

How oil & gas sector woes have hit Singapore banks hard
By: Michelle Zhu

SINGAPORE (August 1): OCBC and UOB, Southeast Asia’s second and third-largest banks by assets, have posted 1H16 financial results which are testament to the “persistent challenges” that domestic banks are facing on asset quality and profitability, says Moody’s Investors Service.

While non-performing loans (NPL) remained on an uptrend for both banks, new NPL formation rate has also accelerated due to their overseas as well as oil and gas sector exposures.

In a Monday report, Moody’s declares “negative” outlooks for both banks based on the following:

1. Declining returns on assets from oil & gas sectors
Together with DBS, UOB has been identified as a principal banker of Swiber following recent news of the offshore oil services company’s application for judicial management. However, UOB has mentioned that its exposure to Swiber is supported by collateral, and hence the impact is “manageable”.

Moody’s notes both banks’ exposure offshore marine services companies, which amounted to 13-18% of OCBC and UOB’s Common Equity Tier 1 (CET1) capital and loan loss reserves at end-June 2016. NPLs for the offshore services sector will increase as more borrowers face cash flow strains and approach the banks for loan restructuring, says the research house.

Out of 19 Singapore-listed offshore service companies, 10 have recorded net losses in 1Q16 which amount to over 60% of the total debt assumed by offshore service companies throughout the sector. Although crude prices have seen a “modest bounce” so far this year, Moody’s expects protracted challenges for offshore services companies as vessel charter and utilisation rates remain lower than historical levels.

Furthermore, falling collateral value poses another risk that will push up provision costs on the banks’ oil and gas exposures. Moody’s hypothesises that this collateral, which includes specialised oil and gas and transportation equipment, will face lower valuations from “weak secondary market liquidity and depressed charter rates, eventually necessitating higher provisions”.

(See: DBS, UOB reveal their exposure to Swiber)

2. Exposure to foreign markets
Aside from their Singapore portfolio, the banks’ oil and gas-related asset quality issues have also led to increases in the NPL ratios of their overseas portfolio. Moody’s points out that some of the “problem loans” to the offshore services sector relate to overseas companies, and are reflected in the higher NPL ratios of their Malaysian and Indonesian loan portfolios.

Moody’s study reflects that OCBC experienced a more significant deterioration in its Greater China NPL ratio compared to UOB, due to a loan by a state-owned manufacturing company. However, OCBC’s management has shared that the borrower has begun servicing the loan under revised terms such that the bank “does not expect to incur any losses” on this exposure.

3. Weakening profitability
Moody’s now expects low- to mid- single-digit loan growth for both banks in 2H16, driven by “continued softness in macro-conditions in Singapore and the region”.

Overall loan growth has either moderated or remained weak for UOB and OCBC as both registered declines in their return on tangible assets in 1H16 from a year ago. This is more pronounced in the banks’ overseas operations in regional emerging markets as compared to in home markets, says Moody’s, due to slower “operating conditions and cautious approach on business growth”. Weakness in business loans in Singapore was offset by a relatively stronger growth of mortgages.

Noting that net interest margins (NIMs) have declined for UOB and OCBC in 2Q16 in tandem with lower Singapore interbank (SIBOR) rates, Moody’s says the banks are now limited in their ability to reprice their loan assets upwards unless the Monetary Authority of Singapore’s (MAS) monetary policy turns “more accommodative”. Nonetheless, the research house says it expects the banks’ NIMs to stay “generally stable at current levels”.

(See: Singapore banks facing earnings stumble as bad loans, Sibor bite)

Despite the abovementioned setbacks, Moody’s claims these deteriorations “remain within the parameters set” for both banks’ latest identical credit ratings of Aa1 for bank deposits (foreign & domestic) and aa3 for baseline credit assessment.

“Notwithstanding these headwinds, [OCBC and UOB’s] loss-absorption buffers have remained stable, as both banks recorded higher core capital levels due to the slowdown in business and risk-weighted assets (RWA) growth, which provide support to their ratings,” states Moody’s.

Shares of OCBC closed 0.7% higher at $8.66, while UOB closed 0.5% higher $18.29.

absolutely.

the story is worse than most people think.

not only upstream activity is hit hard, downstream refineries worldwide are holding excess refined products.

add thousands of tankers floating at sea filled to the brim with nowhere to go.

there are negative reports every week, no positive news at all.

the rebalancing is now said to "take a while longer".

i will not put my money on any O&G until the data and reports clearly show supply<demand.

This post has been edited by AVFAN: Aug 2 2016, 11:04 AM

AND to make it worse..................


The global natural gas glut could get much worse if China has its way. Spot prices for liquefied natural gas (LNG) have plunged in recent years, falling by more than 75 percent from the 2014 highs. This is because too much supply has run headlong into a market that has seen demand slow significantly. But China could make things much worse. After witnessing the shale revolution in the U.S., China has decided it wants its own shale boom. While the U.S. has the world's biggest shale oil reserves, China has the world's most extensive shale gas reserves.



Asian LNG prices has plunged 75% since 2014 due to market oversupply

The country says it wants to find a domestic source of energy, and clean up its horrific air pollution problems by shutting down coal plants. Premier Li Keqiang reiterated last month that natural gas offers a cleaner alternative to coal. China's state-owned energy companies, their profits decimated by the commodities bust, are pushing ahead with billions of dollars in new investment to extract gas from shale. Leading the charge is China Petroleum & Chemical Corp. , or Sinopec, which aims to double domestic gas production within five years.



The US has the world's biggest shale oil reserves, 10 times that of Saudi Arabian oil reserves

Sinopec's push now, amid a global oversupply of gas, presents an unpleasant surprise for an industry already in turmoil. If it succeeds, China's need for imported liquefied natural gas might dwindle - potentially jeopardizing tens of billions of dollars in planned investment from Canada to Papua New Guinea. China has huge shale reserves, but challenges from complicated geology to an inadequate pipeline network long made tapping them elusive... until now. China wants to tap the natural gas no matter how complex its geographical location.



But in terms of shale gas, China is no.1 in reserves

The logic for state-owned companies like Sinopec is obvious. Oil production from its aging fields is falling, so they are venturing into new markets. "By growing gas production they are effectively trying to mitigate what's happening on the oil side of the business," Neil Beveridge, an analyst at Bernstein Research, told the WSJ. Ramping up shale gas "looks like more of a volume strategy than a value strategy," he added. China's shale push is helped along by government subsidies and political support - meaning there is less environmental debate around shale-gas production than in the US.



After seeing what shale boom did for the US, China decides it wants its own shale revolution

In Sinopec is successful, the implications would reverberate beyond China's borders. If China ramps up shale gas production, it might not need nearly as much imported LNG as everyone expected. That would put billion-dollar investments at risk, such as ExxonMobil's recent $2.5 billion offering for InterOil, a company that has gas assets in Papua New Guinea and will allow the oil major to expand LNG exports from that country. Or, Royal Dutch Shell's $54 billion purchase of BG Group could turn out to be a major loser if LNG markets remain depressed for years to come.


China: Difficult to drill shale gas? Our workers will work on it

For now, substantial hurdles remain. Sinopec is still learning shale drilling techniques and infrastructure needs improvement to replicate a shale revolution like that in the U.S. "The space for this market is still rather huge," said Hu Degao, general manager of Sinopec's Fuling unit, a town that host a large shale reserves. "Gas production will top 5 billion cubic metres this year, up from 3 billion last year. By 2017, Sinopec aims to raise Fuling production capacity to 7 billion."



An American shale revolution brings the oil market to the brink, what would a Chinese shale revolution do?

China expects its demand for natural gas will continue to grow in the coming years, but that's not the only reason it wants to develop its shale gas reserves. China doesn't want to be dependent on foreign suppliers for its energy needs, and especially doesn't want to have to rely on LNG, which travels by ship through seas policed by the U.S. Navy. Which is why even with unfavorable market, even the geology isn't good, even the pipelines are absent, nor the water is there, but for energy security and geopolitical reasons, China remains as committed as ever to its fledgling shale industry.

China: We feel insecure having our LNG imports passing through seas dominated by US navy


http://www.theaustralian.com.au/business/w...2a582c343ed3087
http://www.wsj.com/articles/despite-global...gas-1469961966#
http://oilprice.com/Energy/Gas-Prices/LNG-...s-On-Shale.html

Guys,... thank you very much for all of the postings, and research report. I should be pulling-out my numbers and notes to reply to prophet,... but don't have the bandwidth (time) now.

Due to some recent personal circumstances and needs, I'm learning a new mkt for which I am going to invest into soon. I'm still holding on to my SG assets though...

I will continue watching this thread,...

more gas for everyone...

America’s Shale Gas Heads to East Asia for First Time
http://www.bloomberg.com/news/articles/201...-for-first-time

This post has been edited by AVFAN: Aug 3 2016, 02:00 PM

news on keppel corp:

i did not top up ... still waiting for SUPER LOW...

To queue for Suntec tmrw?? Advisable??

what's the reason to buy SUNTEC tomorrow?

The price dropped to target. So, can grab some.

Managed to grab Suntec at 1.65 today

Grad some Kingsmen in the basket!