If you believe that the O&G Industry is almost bottoming, then perhaps it is time to do some homework on the bargains available in the stock market.

Here are some of the Oil & Gas, Shipping related counters that are on my watch list and i will most likely pick a few up when the price is right.

Keppel Corp (BN4.SI)

Keppel is a diversified conglomerate with its core businesses in offshore marine (O&M), property investments and development, and infrastructure-based activities in Singapore and the region. O&Ms the largest segment that typically contributes about 70% of group revenue. 

Key Points
  • Offshore & Marine weighing the group down
  • Property segment provides the Silver Lining in otherwise poor quarter
  • O&G price recovery will improve order wins
  • Decent dividend yield (4% Yield)

Risk Factors
  • Bigger than expected losses on significant provisions (Sete Brazil)
  • Order book continues to deplete amid more deferment of projects
  • Risk of write-downs and provisions on receivables  (US$30m)

Last Traded Price: $5.12 
13-05-2016

What Analysts Say:

CIMB: REDUCE: $5.14
DBS Vickers: HOLD: $5.25
OCBC: HOLD: $5.570
UOB: HOLD: $6.40

Ezion (5ME.SI)

Ezion provides service rigs and offshore logistics support services to the offshore oil & gas industry. It was also one of the first companies to introduce liftboats in Asia and the Middle East regions. 

Key Points
  • Windfarm venture in China is shaping up (more demand for liftboats)
  • Charter-backed fleet expansion, 7 liftboats expected to contribute to earnings in 2017.
  • O&G price recovery, driving charter demand

Risk Factors
  • Potential Charter Rate reduction and contract terminations in prolonged downturn
  • Risk of write-downs and provisions on receivables  (US$30m)

Last Traded Price: $0.490
13-05-2016

What Analysts Say:

CIMB: ADD: $0.630
DBS Vickers: BUY: $0.850
OCBC: HOLD: $0.56
UOB: BUY: $0.790

Vard (MS7.SI)

Vard is a major global shipbuilder that constructs complex and highly customised offshore support vessels.

Key Points
  • Diversification from O&G related vessels prove to be positive
  • New initiatives to assist parent in cruise ship hull contruction
  • Significant order win announced - 15 Module Carrier Vessels
  • Oil price recovery

Risk Factors
  • High gearing
  • Risk of write-downs from Bankruptcy of Customer (Harkand)

Last Traded Price: $0.182
13-05-2016

What Analysts Say:

CIMB: REDUCE: $0.230
DBS Vickers: FULLY VALUED: $0.130
OCBC: HOLD: $0.200
UOB: BUY: $0.210

Yangzijiang (BS6.SI)

Yangzijiang is one of the largest, most efficient and most profitable shipbuilders in China. It has moved up the value chain to produce container ships, large bulk carriers and LNG vessels. 

Key Points
  • Strong balance sheet (Net Cash of 44 Scts)
  • Consolidations. Yangzijiang is one of China's largest ship building corporations
  • Diversification of shipbuilding - LNG Carriers
  • Decent orderbook (US$5.4bn as at end 2015)
  • Healthy dividend yield (4.5 Scts - 4-5% Yield)

Risk Factors
  • Continued write-downs and provisions for bad debt 
  • Risk of cancellation or orders due to prolonged downturn

 Last Traded Price: $0.920
13-05-2016

What Analysts Say:

CIMB: ADD: $1.10
DBS Vickers: BUY: $1.250
OCBC: HOLD: $1.040
Sembcorp Industries (SCI) is a trusted provider of essential energy and water solutions to both industrial and municipal customers. It has facilities with 10,600 megawatts of gross power capacity and over 10 million cubic metres of water per day in operation and under development. It is also a world leader in marine and offshore engineering (via Sembcorp Marine) as well as an established brand name in urban development (comprising industrial parks as well as business, commercial and residential space) in Vietnam, China and Indonesia. 

Key Points
  • Proxy to the O&G Industry via SembCorp Marine
  • Contributions from its Indian Power Plant to kick in
  • Stable earnings from the Utilities Segment
  • Oil price recovery

Risk Factors
  • Marine Segment hit by project deferments
  • Provisions for Sete Brazil's Bankruptcy (Major customer)

Last Traded Price: $2.62
13-05-2016

What Analysts Say:

CIMB: ADD: $3.10
DBS Vickers: BUY: $3.10
OCBC: BUY: $3.07
UOB: BUY: $4.00



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