July 30, 2021

14 thoughts on “Keppel Corp – How Much Do You Know About Her O&M Businesses?

  1. Keppel Corp may transform to become Merlion with "Wings" or "Legs"?

    Great company will have to transform itself or become extinct.

    1. Hi CW,

      I think LNG may bring them to the next level. Some kind of JV with Pavillion or other company, while the continue to build property, infrastructure, and investments.

      I still think oil will come back. The drop is too drastic and fast and seems like some conspiracy theory.

      Alternative energy takes time. Oil industry is energy so closely related with alternative. With current world turmoil, I know lots of wind farm company is suffering or even bankrupt. It is just too expensive for next 10 yrs for alternative energy. Even if it succeeds, maybe Kep or sembcorp will already go into it as well. Hope they have the vision and do Singapore proud.

      Does not matter if I got own their shares or not,

    1. Hi Money Honey,

      Just have to look at track records. It's all about survival of the fittest and I think Kep and Semb Corp belongs to the category that can weather the storm.

      But most people only want to know at what price and when to buy, not if they will survive.

  2. Great information. Do you think Keppel's competency in o&m can be leveraged at other industry? Because oil price may stay low for years or for ever, do they have other battle field to turn around?

    1. Hi AhJohn,

      Thanks. For short term, I do not think so. But what I am saying is the company may evolve over long term.

      By the way, I do not think anybody can predict oil price in the last 50 years.

      Oil price is $20 in 1973 then shot up to >100 in 1979. Then plunge <30 in Mid 80s. End 90s slide to a low of <20. Then after 2000 it was up all the way until Jun 2008 to >140, then plunge during GFC and rebound quickly and now down again….

      So you can hear all sorts of stories of predictions of oil price. Or… I think this, I think that….Frankly all are just speculative, and pretty much irrelevant.

  3. Hi Rolf

    As usual, another great view from someone "drinking oil" every day. Haha.

    Action speaks louder than words. Tell us what price you are aiming and I will consider to follow suit. I know you will say to ask me to do my own research. Come on 🙂

    1. Hi FD,

      I am not vested now, but I think it is not only which price to buy that matters, we need to guest the cycles of the oil, which is so difficult. You need to buy just before the Oil cycle trend up or just after.

      As what I explained to AhJohn above, nobody can predict the Oil Price.

      For something I am unsure, the advice is better not touch for now or SLOWLY AVERAGE DOWN little by little throughout a long period. For those I already owned, I continue hold.

      For Price possibility of me slowing averaging down KepCorp (I never say confirm), with 1H2015 earnings unchanged, it will be at least another 10% down from now. Maybe can use it for trading, then it is a diff story.

      So many people are predicting Oil industry will stabilised in 2017….. and so it means maybe earlier orders will start trickling in late 2016. We shall see.. this is what the market people all say.

  4. Hi Rolf

    Great take there on the O&M segment and the industry as a whole.

    I like how you see Keppel as evolving more into the future LNG vision which will bring about more growth than the typical rig upstream maintenance and drilling, which has been their core all these while.

    I'd also agree that over the years, they've come up stronger by investing and divesting first their banks arm and then now their properties arm, so it is unfair to give them the death sentence just by relating them to oil prices correlation.

    1. Hi B,

      I only says Kep and Sembcorp are good companies. But I never say their share price will not continue to slide.

      But what I am sure is, they are consistently going through change to grow. Many companies do not do that, trust me!

  5. Hi Rolf,

    Thank for the great insight into Keppel O&M current business climate. I presume SCI / SMM is experiencing the same as Keppel O&M? Thanks!

    1. Hi Boonchin,

      Thanks. Unfortunately, I do own SCI and I think I did not make the wise choice at time of buying. Haha…..you know too many top bloggers say BUY…..got distracted….Nah…Blamed it on myself! Anyway I learnt!

      Truthfully, both are good companies, but I think KepCorp is a much better company than SCI or SMM.

      KC is more diversified, design more niche and better marketability, people in O&M more experienced across the board. SMM also has the new upcoming megayard to content with, which requires new adaptability, funds affecting balance sheet. SMM is also weaker in specialised ships division compare to Keppel. Etc etc

  6. hi Rolf, thanks for the write up based on your experience. i would like to get your perspective on the supply of rigs. it would seem that the recent production of rigs will replace all the greater than 30 year old rigs. in this case, the number of rig demand in the future will be much scale down right.

    in the past 80s and 90s, there was a time when there was very very little rigs built, and 90s was a time when keppel fels practically have no businesses in rigs. do you have some views on this?

    1. Hi Kyith,

      You are right. The rigs of today are aging!

      According to a presentation by Transocean (one of world's largest rig owners) last year July, it states that at present, 160 Floaters and 216 (half of total) Jackups are 30+ yrs old. By stats!

      Esp after the BP incidents, there are lots of new regulations imposed in recent yrs. Lots of the aging fleet cannot meet the regulation requirements. Hence need to be scrap!

      Hence rig owners need to actively replacing lower-spec rigs for fleet renewal. It is an active process which by right, they need to invest each year.

      Eg before oil crisis last year, Transocean says they will invest us$1.5-2b a yr.

      In presentation in May, capex is reduced to us$700-1.6b per year up from 2015-2018.

      Base on Transocean stats, I seriously think that the current order backlog in construction not sufficient to replace the aging fleet.

      But the problem now is the depressed oil price causing the temporary over-supply of rigs. Hence all owners are postponing their capex!

      Oil price has stay almost averagely below 50 for 20 yrs bet 1985-2005. So naturally, there are so few rigs!

      Base on above analysis, the price of oil is clearly still the driver of rig demand.

      Hope my humble opinion helps a little.

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