Accordia is flying!

Any news?

Last 2 Qtrs was not great. So, this climb in price is a rather pleasant surprise

WOW!
Good find!

Keppel Sees Prolonged Dearth Of Oil-Rig Orders Amid Glut

(Bloomberg) -- Keppel Corp., the world’s largest builder of oil rigs, sees little prospect of an improvement in global demand amid a supply surplus that’s caused quarterly profit to fall to the lowest in almost a decade.

The company may consider reducing its workforce and mothballing some facilities in its rig-building operations because of excess capacity, the Singapore-based company said Thursday. Keppel Offshore & Marine Ltd. has already shrunk its workforce by about 11,000 and subcontractor headcount by some 8,500 since 2015, according to Chief Executive Officer Chow Yew Yuen.

"It’s about hunkering down," Keppel Corp. Chief Executive Officer Loh Chin Hua said at a briefing. "What we have seen in the industry, it’s not just about oil prices. We have to look at the oversupply of rigs and the current situation with the traditional customers."

Keppel sees a long, harsh "winter" in its rig-building business after net income fell 48 percent in the second quarter to S$205.8 million ($152 million). The company is among Asian shipyards that have cut jobs and are considering dock closures after oil prices more than halved in two years, leading to a slump in orders for offshore drilling and production, deferrals and cancellations.

The company has been hit by non-payments from one of its biggest clients, Sete Brasil Participacoes SA, which filed for bankruptcy protection in April.

Shares of Keppel fell as much as 1.8 percent to S$5.48 and traded at S$5.50 as of 9:27 a.m. in Singapore, while smaller rival Sembcorp Marine Ltd. dropped 2.6 percent to S$1.485. The stocks have both fallen about 15 percent this year, compared with a 1.8 percent advance in the benchmark Straits Times Index.

Keppel said the order outlook is weak because of oversupply of oil rigs and falling day rates, or the fees charged to lease a drilling rig. Demand is expected to return eventually when oil companies curb falling production and replenish declining reserves to meet the world’s requirements for fossil fuels. Revenue at Keppel fell 37 percent on year to S$1.63 billion in the second quarter.

The company has requests to defer delivery of three jackups for Grupo R, a Mexican energy company, and one jackup for Uruguay-based Parden Holding to next year, and will be compensated, it said. Jackup rigs are used in shallow waters and have extendable legs that allow them to stand on the ocean floor.

The offshore division has secured more than S$460 million of new orders in the year to date, with deliveries stretching into 2021. Its orderbook stood at S$4.3 billion at the end of June, falling from S$9 billion at the end of December 2015. The contract backlog excludes orders from Sete Brasil, for which Keppel has stopped construction pending payment.

"Even if new orders materialize in the coming quarters, we reckon that operating margins on those contracts will likely be mid-high single digit at best," Royston Tan, an analyst at Daiwa Capital Markets in Singapore, wrote in a note.

Sete Brasil accounts for a combined $10.5 billion in orders for semi-submersibles and drill ships at Keppel and Sembcorp Marine. The Brazilian company fell into financial difficulty after it was unable to secure long-term financing and its only client, state-run oil producer Petroleo Brasileiro SA, faced allegations of kickbacks.

The investigations into the scandal have wiped out nearly half of Brazil’s naval industry jobs in the past two years, leaving companies bankrupt and creditors unpaid. Keppel and Sembcorp Marine have yards in that country to cater to demand.

Other Asian shipbuilders face a similar situation as orders have dwindled. South Korean shipyards such as Daewoo Shipbuilding & Marine Engineering Co. are seeking to raise a combined 8.41 trillion won ($7.4 billion) selling assets as part of a restructuring, which also includes job cuts, after delivery delays led to losses last year.

Keppel’s property and real estate division was the biggest contributor to second-quarter profit and cushioned the impact of weak results in the offshore and marine business.

"A silver lining for Keppel is the resilient trend of urbanization in Asia, buoyed by a growing middle class and continuing rural-urban migration," it said.

While the company is confident in the long-term fundamentals of the offshore and marine industry, "we are mindful that a long downturn may be upon us and we have to position our business accordingly," Keppel Corp. CEO Loh said.

SGX website is also down.....they need to get a new CEO. This fella is not cutting it.......

Hans,

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

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.

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

Yellen can talk all she like.

Imagine the developed world is having negative interest rates, and US increase rates.

Anyone thought about what would happen when the rush starts?

Rise in interest rates normally mean Equities wil go opposite, no?

Is it possible to open this account form Std Chartered Msia?

i think there is No withholding tax if you submit your WBEN-8 forms to your broker.

Sounds similar! The WBEN-8 form is t o declare that you are not a U.S based income earner, as i understand it.
If that be the case, the aboce cases are similar in nature with regards to the investor being a non U.S citizen and therefore not subject to U.S taxes.

i have a U.S broker and i have submitted the WBEN-8 forms to them. So far i have not been taxed.

Let me check later on my divs whether they have withheld anything

If you are not a U.S citizen and you are investing in U.S equities offshore, they should send you a form.
Otheriwse you should sack him. It's standard procedure.

Maybe some are.
In fact i think those in business are always finding ways, and of course those who songlap.

Millionaire in MYR is nothing to shout about nowadays.

This post has been edited by prophetjul: Jan 10 2017, 08:33 AM

Even in retirement, FD is not the way to generate the bulk of income. It is very inefficient. 3% does not eveb cover real inflation, only the gomen's worked figures.

There are many asset vehicles to be able to generate 5 to 7% quite easily.

This post has been edited by prophetjul: Jan 10 2017, 08:59 AM

Looking at the earnings for last 5 months and DPU, the yield at 85cents if only 5.67% annualised.
i presume that's a good yield for US?

so pleased i sold sabana above $1 !!!!!
i sold due to declining DPU and also that several master leases were expiring and the manager has not managed to mitigate that.
We can see the impact of a lousy manager now.

looks like the manager is screwing shareholders to enrich themselves!

This post has been edited by prophetjul: Jan 27 2017, 08:39 AM