In our earlier report, we highlighted that international oil companies are reining in their capex plans, though national oil companies are still keen to sustain their spending. With softening day rates in the deepwater and ultra-deepwater rig segment, and potential headwinds for the jack-up rig segment next year, we are neutral on the rig market. The outlook for the OSV market remains positive, though one must also differentiate between vessel types, sizes and geographical areas. Meanwhile, there are also pockets of opportunities in other offshore assets. We still see significant upside for Nam Cheong [BUY, FV:S$0.55] and Ezion Holdings [BUY, FV: S$2.78]. While KEP’s [BUY, FV: S$12.31] “Near market, near customer” strategy puts it in good stead to secure more orders, we see diminishing upside should the stock maintain its current upward trajectory. Along with our earlier downgrade of Sembcorp Marine and Sembcorp Industries, we downgrade our sector rating to NEUTRAL. Over the long term, however, we are convinced about the positive outlook for the entire sector.
Rig market – neutral
In our earlier report “Going to where the customers are” on 2 Jun 2014, we highlighted that international oil companies are reining in their capex plans, though national oil companies are still keen to sustain their spending. We have already seen a softening in the day rates for deepwater and ultra-deepwater rigs, and though charter rates for jack-ups are still holding up, we see greater downside risks given the substantial newbuild deliveries ahead. However, companies with a strong presence in growth areas such as Mexico and Brazil may still be able to secure orders going forward.
OSV market- overweight, but be selective
The outlook for the OSV market remains positive, though one must also differentiate between vessel types, sizes and geographical areas. Currently, day rates in Indonesia are buoyant with the cabotage law, but in neighbouring Malaysia, the President of Petronas has sounded caution over charter rates and a potential oversupply. Meanwhile, Mexico is a bright spot, as PEMEX’s tendering activity for OSVs has been rising. In the Middle East, AHTS utilisation rates are likely to be more positive, but players seem to hold less optimism for the North Sea.
Other offshore assets – pockets of opportunities
The demand for liftboats in Asia Pacific is good and looks set to grow with increasing acceptance by oil companies. Industry players are also positive on the outlook for certain large-size accommodation vessels, as well as subsea construction vessels, given the relative scarcity of such assets.
NEUTRAL, but positive long-term
We still see significant upside for Nam Cheong [BUY, FV:S$0.55] and Ezion Holdings [BUY, FV: S$2.78]. KEP's [BUY, FV: S$12.31] “Near market, near customer” strategy puts it in good stead to secure more orders, but we see diminishing upside should the stock maintain its current upward trajectory. Along with our earlier downgrade of Sembcorp Marine and Sembcorp Industries, we downgrade our sector rating to NEUTRAL. Over the long term, however, we are convinced about the positive outlook for the entire sector.
In our earlier report “Going to where the customers are” on 2 Jun 2014, we highlighted that international oil companies are reining in their capex plans, though national oil companies are still keen to sustain their spending. We have already seen a softening in the day rates for deepwater and ultra-deepwater rigs, and though charter rates for jack-ups are still holding up, we see greater downside risks given the substantial newbuild deliveries ahead. However, companies with a strong presence in growth areas such as Mexico and Brazil may still be able to secure orders going forward.
OSV market- overweight, but be selective
The outlook for the OSV market remains positive, though one must also differentiate between vessel types, sizes and geographical areas. Currently, day rates in Indonesia are buoyant with the cabotage law, but in neighbouring Malaysia, the President of Petronas has sounded caution over charter rates and a potential oversupply. Meanwhile, Mexico is a bright spot, as PEMEX’s tendering activity for OSVs has been rising. In the Middle East, AHTS utilisation rates are likely to be more positive, but players seem to hold less optimism for the North Sea.
Other offshore assets – pockets of opportunities
The demand for liftboats in Asia Pacific is good and looks set to grow with increasing acceptance by oil companies. Industry players are also positive on the outlook for certain large-size accommodation vessels, as well as subsea construction vessels, given the relative scarcity of such assets.
NEUTRAL, but positive long-term
We still see significant upside for Nam Cheong [BUY, FV:S$0.55] and Ezion Holdings [BUY, FV: S$2.78]. KEP's [BUY, FV: S$12.31] “Near market, near customer” strategy puts it in good stead to secure more orders, but we see diminishing upside should the stock maintain its current upward trajectory. Along with our earlier downgrade of Sembcorp Marine and Sembcorp Industries, we downgrade our sector rating to NEUTRAL. Over the long term, however, we are convinced about the positive outlook for the entire sector.
No comments:
Post a Comment