Friday 22 March 2013

Offshore and marine sector

CIMB Research, March 20
This week, Chinese shipyards took centre stage after Shanghai Waigaoqiao and China Rongsheng Heavy Industries secured orders for a total of three jack-up rigs. However, these rigs are either heavily financed or have lower specifications.
We are not overly concerned by the competition posed by the Chinese for Singapore yards. Traditional drillers with stronger cash flows should still find comfort in Singapore and Korean yards, unwilling to take on risks in quality and delivery. No change to our EPS.
Maintain "overweight" on Singapore rig builders with catalysts from: (1) stronger-than-expected orders; and (2) a breakthrough in drillships from non-Petrobras clients. Our top pick is Keppel Corp.
OVERWEIGHT

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