if it is about o&g sector, the question is for how long...

we have yet to see mega M&A's for this sector - oil cos, oilfield services, rig builders, support services incl logistics...

i will not put any money in this sector for some time.

not until it has come full circle.

in my radar UOB.... But dunno when is the lowest?

I reviewed my list of targetted REITs and Dividend Companies this evening and I saw all have gone down. YES - truly,...the days of 2008/9 have come again.

Let us prepare our bullets, pick our targets, and prepare ourselves for the big battle ahead. If we are successful in this battle, we will enjoy real passive income in the next few years, perhaps for another 8 years or so, before the next cycle comes again for the next battle.

BATTLE 2016 !!!!!...FOR PASSIVE INCOME, AND FOR TRADERS, TO HUAT AHEAD !!!

this seems to be the message from most analysts/technicians.

all kinds of reports now pointing to weak oil will get weaker, china weakness will get weaker, credit markets getting squeezed...

still, a minority is bullish, all will rebound soon.
i dumped all my us and sg stocks since a couple of months ago, so glad.

kept only sg reits... hope they can ride it out.

now, just wait and look for signs of reversal.

and trade a bit here and there.

China was never the elephant in the room in the 2008/9 GFC. I agree about the data from China,...reliable or not ??

I am not spending my time trading, instead I am spending it collecting bullets, and studying-up all my instruments, getting ready to go in as soon as the signal is there. I really hoped the recovery this time round is NOT another V-slope rising sharply, as in 2009.

I wonder if any investors are practising this same strategy now,....

Hi Prophet,... My personally-devised signal,.... I need to test it first,... if it has a >75% accuracy, then I'll share it with everybody here. If it doesn't, better keep quiet and swallow the failure myself,....

Aren't you concerned about the increasing warehouse space this year and the next, which may cause a glut, leading to further rental compression ?

Not all,... from my current holdings, I can see that my healthcare REITs and the sole data centre REIT are still holding-up well in terms of rentals, and still have their rental terms steady and not having any re-negotiation. The occupancy rate has not dropped too.

It would be pointless for a REIT to stand hard on imposing its rental rate, and in the end brings about a decrease in occupancy rate, or, for Industrial REITs, causing the Master Tenant to move out, having to convert to being multi-tenanted ! Multi-tenancy increases property expenses, causing a severe drop in net property income.

Thank you, prophet for your quality reply,...

For me, I look at DPU for now, and DPU is affected by external economic factors, among which are rental compression and occupancy rates. I mentioned in an earlier post that for the healthcare sector in general, the DPU is quite resilient, AND I did not talk about the yield. Why ?

Because to me, yield is based on a formula that takes into account the price of the REIT. If the DPU is resilient, then I start to hope for two things in my investment journey :-

1) the economy goes down and the institutions are forced to sell due to their internal policies, after which, the price will be pressed down.

2) the DPU continues to remain resilient even under bad economic conditions, for whch I have to observe very closely, and to attend AGMs, and to attend talks, and to debate in this forum,...

If I get positive responses to the above two things, then I know that my yield will TAKE CARE OF ITSELF, if I buy-in to those healthcare counters. Talking about guarantee or not, it is not possible to offer such commitments due to the ever-changing environment. We use other tactics to forward an effect of 'guarantee' to the success of our, in this case, REIT investments.

All I have said are repeated by RHB Analysts in article below, published yesterday, but reached me this afternoon. Earlier, I did not know the Book Value of the O&M segment though,... now I do :-

The price rout has gone too far, analysts say.

Investors have shunned Keppel Corp’s shares ever since the oil price crash began. As though adding insult to injury, the stock took a fresh beating last week on news of Sete Brasil’s looming bankruptcy. However, analysts from RHB Research noted that the steep decline may have finally gone too far.

RHB argued that at current valuations, it appears that Keppel’s offshore and marine (O&M) division is now valued below zero. RHB says that despite its current troubles, Keppel’s O&M segment still has a value of $5.56 per share.

Apart from that, RHB said that the absence of rig orders does not mean the absence of work for Keppel. The group can still snatch contracts for LNG vessels, floating production, storage and offloading (FPSO) conversions, fixed platforms, other specialised vessels, and vessel repairs.

“We expect the O&M division to continue generating cash and delivering ROEs well above the cost of equity. Even if O&M earnings halve this year, a 20% ROE still deserves a healthy premium to book value,” said RHB.

“The market is treating Keppel like a pure play on oil & gas, ignoring all the other divisions in this diversified conglomerate. Key short-term risk is a potential Sete Brasil bankruptcy, with a 40% impact on the orderbook, but this looks largely priced in,” the report added.

Further comments : At a Book vAlue of $5.56 per share, KepCorp is now trading at a heavy discount to this Book Value. Bear in mind that $5.56 is the Book Value for ONLY the O&M segment, and is not inclusive of the other,... three or four business segments of KepCorp.

BUY when the your targetted price hits.

Well, the analyst did mention too that even if O&M earnings halve this year, a 20% ROE still deserves a healthy premium to book value. I suspect they still have remaining activities on other rigs besides the ones contracted with Sete Brazil, since they always mentioned that they will still be busy for the next two years.

KepCorp's reporting is on coming Thursday at 5.30 pm. Let's see what outlook that they have for this year, and if they will support the analyst's theory that there are still FPSO contracts out there, and if these contracts can be 'snatched' from competitors. Yes, I would agree that these high-value contracts should be almost none in the world by now. Maybe the ones that are available are more towards repair and refurbishment projects for these rigs, in preparation for the upswing in oil price.

Does your 1.5Mil barrels of excess oil daily include the contribution from Iran soon ?

QUOTE(Hansel @ Jan 20 2016, 03:18 PM)
Well, the analyst did mention too that even if O&M earnings halve this year, a 20% ROE still deserves a healthy premium to book value. I suspect they still have remaining activities on other rigs besides the ones contracted with Sete Brazil, since they always mentioned that they will still be busy for the next two years.

KepCorp's reporting is on coming Thursday at 5.30 pm. Let's see what outlook that they have for this year, and if they will support the analyst's theory that there are still FPSO contracts out there, and if these contracts can be 'snatched' from competitors. Yes, I would agree that these high-value contracts should be almost none in the world by now. Maybe the ones that are available are more towards repair and refurbishment projects for these rigs, in preparation for the upswing in oil price.

Does your 1.5Mil barrels of excess oil daily include the contribution from Iran soon ?
Well,... referring to our comments last week,... looks like there is still work for Keppel O&M !
Keppel FELS delivers first rig of the year safely and on time !

It will be the fifth KFELS B Class jackup rig to work for Gulf Drilling International.

Keppel FELS, a wholly owned subsidiary of Keppel Offshore & Marine (Keppel O&M) has delivered Halul, a KFELS B Class jackup rig, to Gulf Drilling International Ltd. (q.s.c) (GDI) of Qatar. It was completed on 21 January 2016, ten days ahead of schedule, on budget and with a perfect safety record. It is the first rig that Keppel FELS has delivered this year.

Halul is also the fifth KFELS B Class jackup rig delivered to GDI. With its continued successful partnership with Keppel FELS, GDI has renewed options for two more repeat KFELS B Class rigs for deliveries in 2018 and 2019.

Mr Wong Kok Seng, Managing Director of Keppel O&M (Offshore) and Keppel FELS, said, "We are proud to deliver another rig to GDI early and safely. This is our first delivery of the year and we are proud that even in a low oil price environment, the KFELS B Class continues to be the preferred rig in the market for its high quality, efficiency and safety.

"While there is widespread industry cautiousness, the strong relationships we have built with our long-standing customers, such as GDI, enables us to work together to deliver projects in a win-win fashion."

The KFELS B Class rigs have a strong track record for GDI. Sister rigs Dukhan and Al Zubarah are operating successfully for Qatar Petroleum while Al Khor is performing well for Shell.

Mr. Mubarak A. Al-Hajri, Chief Executive Officer and Managing Director of GDI, said, "We are pleased to receive the Halul ahead of schedule, enabling us to start work earlier for Qatar Petroleum. Reliability, safety, efficiency and quality are our top priorities in choosing a rig and a shipyard. Keppel FELS and the KFELS B Class design have demonstrated their strengths in these areas repeatedly. That is why we have chosen to renew our options for two more rigs with them. We are confident in the long term fundamentals of the industry and when the market recovers, we will be well-equipped to meet the demand."

Built to GDI's requirements, the jackup rig has been designed to operate in the higher ambient temperature of the Middle East. The KFELS B Class is equipped with larger spud cans for reduced bearing pressure and expands its operational coverage in more places, especially in sea beds where soft soil is predominant. The rig can drill wells through 30,000 feet with a cantilever that can skid out 70 feet from the edge of the hull to drill wells. It features offline stand building capabilities and 7,500 PSI mud pumps, with accommodation for 150 persons.

Besides newbuild rigs, Nakilat-Keppel O&M, Keppel's joint venture shipyard in Qatar, recently completed a self-propelled and self-elevating liftboat for GDI.

Edited by putting in bold my earlier points and the points in the latest update by Keppel Corp..

Tq prophet,... good discussion with you. The following rigs should not have been taken into account in the Earnings Statement yet. These are new orders :  'That is why we have chosen to renew our options for two more rigs with them.'

When you said the contract with Sete has been accounted for, do you mean the provision (bad debt) amounting to that $250M ? That $250M has already been taken into account in the previous Q earnings, and all-in, the total profit for FY2015 is $1.525B. So, if those two rig orders should come in from Global Drilling Investments (GDI) this year, these orders should add to the orderbook for FY2016. Hopefully, it happens.

“We had taken steps to mitigate our exposure by slowing the construction of Sete’s rigs after payments from our customer ceased over a year ago,”  Loh Chin Hua, Keppel Chief Executive Officer said.

The CEO said that of six Sete rigs, only the first two semis, which are also in the most advanced stages, have been sent to the Keppel yard in Brazil. Meanwhile, minimal work had been done on the last two semis.

Singapore’s Keppel, which had already received about US$1.3 billion from Sete, prior to Sete putting a halt to payments, is now awaiting further clarity on the situation.

In the meantime, Keppel made a provision of about S$230 million for Sete projects in 4Q 2015, “after assessing our construction progress, payment status and amounts due to our vendors amongst other areas.”

“We had kick started 2015 with expected deliveries of 15 drilling jack-ups; eight of these have since been pushed into 2016….The delays are not extensive, the contracts are still valid, and we are working towards delivering several of them in the early half of this year,” CEO said.

Also, the company’s CEO has cited industry reports that suggest that global exploration and production (E&P) spending could decline by 15% or more in 2016 should oil prices remain at current levels.

Prophet,.. tq for your good insights,... And you have great observation skills,.. I'll start observing rigs too from now,...

If,..let's say,..someone in OPEC or in a strong non-OPEC oil-producing country says : supply cut,....... will this really :-

1) turn around China's economy ?

2) improve stock indices around the world, including the STI-ST ?

3) and locally in Kangkong Land : re-strengthen our MYR back to 4.00, or slightly below 4.00 vs the USD ?

Do all the above really hinge on the price of oil, and oil price only and no other factors ???????????