Post on 04-Jun-2018
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OVERWEIGHT
(maintain)
Analysts
Low Pei Han, CFA (Lead) +65 6531 9813
lowph@ocbc-research.com
Wong Teck Ching, Andy +65 6531 9817
andywong@ocbc-research.com
Relative totalreturn 1m 3m 12m
Sector (%) 2 9 12STI-adjusted (%) 3 4 3
Price performance chart
2700
2900
3100
3300
3500
3700
643
686
729
772
814
857
Nov-12 Feb-13 May-13 Aug-13 Nov-13FSTOG FSSTI
Sector Index Level Market Index Level
`
Sources: Bloomberg, OIR estimates
Industry-relative metrics
Company PriceFair
ValueRating
Keppel Corp 11.31 12.87 BUY
Sembcorp Marine 4.44 5.68 BUY
Ezion Holdings 2.10 2.57 BUY
Nam Cheong 0.29 0.37 BUY
Triyards 0.675 0.88 BUY
Dyna-Mac 0.405 0.47 BUY
Yangzijiang 1.165 1.22 HOLD
VARD 0.80 0.84 HOLD
KS Energy 0.50 0.50 HOLD
Ezra Holdings 1.315 0.99 SELL
COSCO Corp (S) 0.735 0.61 SELL
Bumi Armada 3.97Underrev
Underrev
Index mostly in-line with market; among top three best
performing sub-indices
The FTSE Oil and Gas index has performed more or less in-line with the
broader market this year. Still, it is among the top three best-performing FTSE sub-indices YTD, along with the FTSE
Telecommunications and FTSE Maritime indices. On the other hand,
price performances of individual stocks have differed greatly, with the
key outperformers being Kreuz Holdings (+95% YTD) and Ezion
Holdings (+45% YTD) in the Offshore & Marine space.
Positive on the rig building sector and certain OSV segments
Stepping into 2014, we continue to advocate a focused stock-picking
strategy, overweighting companies that are operating in sub-sectors
with more favourable demand-supply dynamics, and those with strong
balance sheets and order books. The local rigbuilders are expected to
continue securing orders at a pace that will at least match this years,
while the offshore support vessel sub-sector should also see continued
recovery as the market situation gradually tilts in favour of vessel
owners the Indonesian and Malaysian OSV sectors are especially
looking relatively promising. Meanwhile, subsea tendering activity
remains firm.
Solid long-term fundamentals; near term driven by macro
events
We believe that the offshore sector has strong long-term fundamentals
as countries have an interest in fulfilling as much domestic demand as
possible in order to boost energy security. Investors should be mindful,
however, that macro events remain a key driver of the broader sector
in the near term. Going into 2014, we remainOVERWEIGHTon the oil
and gas sector, as we expect that the favourable oil price environment
will continue to be conducive for capital expenditure. Our preferredpicks are Keppel Corporation[BUY, FV: S$12.87], Sembcorp
Marine[BUY, FV: S$5.68], Ezion Holdings[BUY, FV: S$2.57] and
Nam Cheong Ltd[BUY, FV: S$0.37].
GOOD PERFORMANCE TO CONTINUEIN 2014 Among top three best performing FTSE indices Stick to focused stock-picking Solid long-term fundamentals
OIL & GAS | OVERWEIGHT2 Dec 2013
Sector Update
Asia Pacific Equity ResearchSingapore | Oil and GasSector
MCI(P) 007/06/2013Please refer to important disclosures at the back of this document.
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TABLE OF CONTENTS
SECTION A. EVALUATION OF PAST PERFORMANCE
SECTION B. TRENDS AND OUTLOOK
I) Oil marketII) Offshore Drilling RigsIII) Offshore Construction and SubseaIV) Offshore Support Vessels
SECTION C. SECTOR COVERAGE
SECTION D. PREFERRED PICKS
SECTION E. DISCLAIMER
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SECTION A. EVALUATION OF PAST PERFORMANCE
What transpired in 2013?
Mostly in-line with market; divergence in 2Q13
In our year-end report last year, we expressed our optimism that the Oiland Gas sector would outperform in the early part of 2013. Indeed, theFTSE Oil and Gas index delivered a positive performance against the STIin 1Q13, but it underperformed during the mid Mar to May period wheninvestors rotated to lower beta counters and yield plays such as REITs.
Oil and gas counters outperformed the market when investors switchedout from yield plays with increased market chatter of rising interest rates,but mostly in-line and disappointing earnings results from certaincompanies in the sector resulted in a somewhat neutral performance ofthe sector vis--vis the broader market since then.
Among top three best performing sub-indices to-date
Still, it is among the top three best-performing FTSE sub-indices YTD,along with the FTSE Telecommunications and FTSE Maritime indices.
Exhibit A-1: FTSE Oil & Gas against the STI and Brent oil
90
92
94
96
98
100
102
104
106
108
110
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2013
Base
0
20
40
60
80
100
120
140
US$/bb
l
FSSTI Index (rebase d)
FTSE Oil & Gas (rebased)
Brent crude (US$/bbl)
-10
-5
0
5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2013
Baseunits
Spread (FTSE Oil & Gas - FSSTI)
Source: Bloomberg, OIR
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Exhibit A-2: FTSE Oil and Gas and the STI in the past five years
-50
0
50
100
150
200
250
Jan09
Apr09
Jul09
Oct09
Jan10
Apr10
Jul10
Oct10
Jan11
Apr11
Jul11
Oct11
Jan12
Apr12
Jul12
Oct12
Jan13
Apr13
Jul13
Oct13
STI
FTSE Oil and Gas
Source: Bloomberg, OIRDespite a broadly in-line performance against the general market so far,the price performance of individual stocks have differed greatly, with thekey outperformers being Kreuz Holdings (+95% YTD) and Ezion Holdings(+45% YTD, after adjusting for bonus issue) in the Offshore & Marinespace. Under the Exploration and Production (E&P) sub-sector, MirachEnergy was the star performer, having risen to S$0.179 (152% rise)from a low base of less than ten cents. Meanwhile, underperformersinclude VARD Holdings at -38%, Otto Marine at -32%, and KS Energy at-26%.
Exhibit A-3: Price performance of sector stocks
StockPrice performance
YTD (%)
Offshore & Marine
KREUZ HOLDINGS 95
EZION HOLDINGS 45
YANGZIJIANG SHIP 22
EZRA HOLDINGS 16
KEPPEL CORP LTD 6
SWIBER HOLDINGS 5
JAYA HLDGS LTD 2
SEMBCORP INDUS 1
MARCO POLO MARINE 0
ASL MARINE HLDGS -2
SEMBCORP MARINE -3
CH OFFSHORE LTD -12
DYNA-MAC HOL LTD -17
COSCO CORP (S) -19
KS ENERGY -26
OTTO MARINE -32
VARD HOLDINGS -38
E&P Companies
KRIS ENERGY NA
MIRACH ENERGY 152
RAMBA ENERGY LTD 12
RH PETROGAS LTD 11
INTERRA RESOURCES -3 Note: Ezion- adjusted for bonus issueSource: Bloomberg, OIR
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Exhibit A-4: Large yards Exhibit A-5: Small to mid sized yards
70
80
90
100
110
120
130
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Base=100
2013
Keppel Corp
Sembcorp Marine
COSCO Corp
Yangzijiang Shipbuilding
50
60
70
80
90
100
110
120
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Base=100
2013
VARD
Nam Cheong
ASL Marine
Otto Marine
Marco Polo Marine
Exhibit A-6: Offshore service providers Exhibit A-7: E&P companies
60
70
80
90
100
110
120
130
140
150
160
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
2013
Swiber Holdings
Ezra Holdings
Ezion Holdings
CH Offshore
Jaya Holdings
0
100
200
300
400
500
600
700
800
50
75
100
125
150
175
200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Base=100(MirachEnergy)
Base=100
2013
KrisEnergy
RH Petrogas
Interra Resources
Ramba Energy
Mirach Energy (RHS)
Source: Bloomberg, OIR Source: Bloomberg, OIR
More companies investing in newbuild rigs
With the strong industry outlook for high spec rigs, we saw morecompanies jump onto the jack-up ownership bandwagon this year e.g.Falcon Energy, KS Energy, Swissco Holdings and Viking Offshore andMarine, amongst the listed companies. Coupled with attractive paymentterms offered by Chinese yards, several of the rigs were ordered fromyards like Cosco Corp and Jiangsu Rongsheng. Some of the units havebeen on-sold to other buyers after prices rose.
More interest in the E&P segment
This year also saw greater investor interest in the exploration andproduction (E&P) sector with the IPOs of KrisEnergy and RexInternational, benefitting counters such as RH Petrogas, Mirach Energy,Ramba Energy and Interra Resources. It is imperative that these
companies demonstrate earnings sustainability after the initial ramp-upphase.
and recovering OSV sector tooThe market also saw renewed interest in the offshore support vesselsector with the signs of a recovering industry, as well as the IPO ofPacific Radiance and the expected IPO of PACC Offshore Services (POSH),which should be launched by 1Q14. Do note, however, that the outlookfor different OSV companies can differ greatly, depending on the assetsthey own as well as the geographies where they deploy them.
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SECTION B. TRENDS AND OUTLOOK
OIL MARKET
Significant rise in WTI prices, but only catching up with Brent
In recent months, WTI prices have recovered significantly, increasingfrom about US$87/bbl in mid Apr to US$106/bbl in late Aug. However,this is only a convergence in the Brent-WTI spread which becameapparent starting in early 2011. As seen from Exhibit B-1, the spread hasdecreased to less than US$5/bbl in recent weeks. Recall that the spreadfirst appeared due to logistical issues that led to a supply glut of WTIcrude in Cushing, Oklahoma, depressing WTI prices. With improvedpipeline networks, the use of rail transport and higher demand from USrefiners, Cushing inventories dropped from 50 mbbl in early Jan 2013 to38 mbbl in early Aug (Exhibit B-2).
In more recent weeks, the spread has increased again, mainly due to 1)supply disruptions in the Middle East, 2) lower demand from US refiners
and 3) strong production from Bakken to Cushing. This spread isexpected to narrow once the US refineries come out of seasonalmaintenance.
Exhibit B-1: WTI and Brent crude prices
80
85
90
95
100
105
110
115
120
Sep12
Oct12
Nov12
Dec12
Jan13
Feb13
Mar13
Apr13
May13
Jun13
Jul13
Aug13
Sep13
Oct13
Nov13
US
$/bbl
Crude oil- WTI Cushing US$/bbl
Crude oil- Brent Dated US$/bbl
Source: EIA, Bloomberg
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Exhibit B-2: Cushing crude oil inventories
Source: Bloomberg, OIR
Impact mainly felt by US companiesThat said, the rise in WTI prices has had a positive impact on USdomestic oil producers, while the profits from transporting oil by rail willshrink, slowing the demand for train cargoes and affecting the shareprices of related companies. US refiners in the Midwest are also losing anadvantage they have enjoyed for about three years prior to the priceconvergence, refiners margins have benefited from the purchase oflowly-priced WTI crude and sale of refined products that are linked to themore expensive Brent.
The offshore companies that we cover and speak to have been quoting
the oil price threshold level of US$70-75/bbl for offshore deepwatercapex based on Brent prices rather than WTI prices, hence there shouldnot be an impact on corresponding capex plans with the change in WTIprices.
Ample supplies, but still elevated enough to support capexAs global growth continues to underpin crude oil demand in the longerterm while geopolitical factors such as Egypts civil friction and tension inSyria may lead to price spikes, oil prices are likely to remain sufficientlyelevated (above offshore deepwater breakeven threshold of ~US$70-75/bbl) to spur capital expenditure in the sector. Healthy oil productionfrom both OPEC and the US is expected to result in ample supplies OCBC Treasury Research and Strategy is expecting Brent and WTI to endthe year at around US$100/bbl and US$95/bbl, respectively.
Exhibit B-3: OCBCs oil price forecasts
(US$/bbl) 1Q13 2Q13 3Q13 4Q13F 1Q14F 2Q14F 3Q14F 4Q14F
WTI 94.4 94.2 102.5 95.0 93.8 92.5 91.3 90.0
Brent 112.6 103.4 106.3 100.0 97.5 95.0 92.5 90.0 Source: OCBC Treasury Research and Strategy
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Exhibit B-4: Healthy production levels fromOPEC
Exhibit B-5: US oil production rose aboveimport levels this year
Source: OCBC Treasury Research & Strategy Source: OCBC Treasury Research & Strategy
Strong long-term fundamentals; energy security is keyThe global energy map is changing, with the resurgence of oil and gasproduction in the US, as well as a retreat from nuclear power in somecountries. For the offshore sector at least, we believe it has strong long-
term fundamentals as countries have an interest in fulfilling as muchdomestic demand as possible in order to boost energy security. In Asia,this does not just apply to China and India, but also to places such asMalaysia and Indonesia which continue to face production declines ifinvestments in the sector are not increased. Going into 2014, we remainOVERWEIGHTon the oil and gas sector, as we expect that the favourableoil price environment will continue to be conducive for capital expenditurein the sector. However, investors are well-advised to note that differentstages of the oil & gas value chain, as well as their sub-segments,experience different demand and supply dynamics:
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OFFSHORE DRILLING RIGS
Rig demand remains strongGlobal economic issues have not meaningfully impacted demand foroffshore drilling services, as rig demand remains strong in all major globalmarkets and across most rig types. This is evident by the high levels ofmarketed rigs under contract, which has led to sustainedfavourable day rates in the ultra-deepwater segment and increasing ratesin the deepwater and jack-up segments. Certainly, there is variability inrates depending on geographical location, rig age and specifications, withimprovements in utilisation levels and day rates mostly in the high spec rigsegments.
Exhibit B-6: Contracted rig count
0
50
100
150
200
250
300
350
400
450
Jul00
Jul01
Jul02
Jul03
Jul04
Jul05
Jul06
Jul07
Jul08
Jul09
Jul10
Jul11
Jul12
Jul13
Units
Jackups Semi-subs Drillships Platform rigs Source: Rigzone, Bloomberg, OIR
Capacity constraints in the equipment supply chainThe high level of drilling activity, together with the backlog of rigs underconstruction, is creating capacity constraints in the global offshore rigequipment supply chain. As a result, equipment delivery lead times arebeing extended and equipment prices are increasing as well. Playerssuch as Atwood are expecting that this would lead to delayed deliveries.
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Exhibit B-7: Contracted rigs and day rates for various rigs now and then
Rig typeContracted
rigs
Total
fleet
Average
day rate (US$)Rig type
Contracted
rigs
Total
fleet
Average
day rate (US$)
Drillship
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Threat of the Chinese yardsInvestors have been understandably concerned about the threat ofChinese yards in the offshore space, given that the Chinese governmenthas mentioned that ship and rig building will be one of the majorindustrial pillars for the country going forward. Indeed, Chinese yardshave been successful in securing a high number of jack-up rigs YTD, andwe believe that this year will be a significant milestone in the history ofChinese rigbuilding.
Credit crunch in China = less free money?However, we note that many of the contracts that Chinese yards havewon so far are mostly from newcomers in the offshore industry, includingspeculators who sell the rigs later for a profit. Very favourable paymentterms have been extended to these customers e.g. Prospector Offshoresdownpayment was only 6.5% with Shanghai Waigaoqiao Shipbuilding(SWS). As China struggles with a credit crunch, free money will becomescarcer and we believe that we would see the demise of more secondand third tier shipbuilding and rigbuilding firms.
Monitor the buyers of rigs from Chinese yardsOne of the few serious contenders in China today is Dalian Shipbuilding,which has won orders from Norwegian company Seadrill, the only
established player that has ordered from a Chinese yard to date. TheNorwegians have always been a less risk-averse and adventurousgroup of rig investors recall that it was also a group of entrepreneurialNorwegians that supported Singapores rigbuilding in the earlier days. Tillwe see more established players ordering from the Chinese yards, we donot think that Keppel Corps and Sembcorp Marines share in high-specrigs will be eroded away just yet.
Exhibit B-11: KEPs and SMMs new order wins since FY05
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 3Q13
S$b
KEP
SMM
Source: Companies, OIR
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OFFSHORE CONSTRUCTION & SUBSEA
Offshore construction refers to the installation and commissioning ofoffshore infrastructure used in the production of oil and gas. A widevariety of offshore construction vessels (OCVs) are used in this stage,including heavy-lift vessels, derrick-lay vessels, pipe-lay units, and multi-purpose vessels for subsea umbilicals, risers and flexibles installation(SURF). Self-elevating units such as those constructed by Triyards andowned by Ezion Holdings are also gaining in popularity in Asia Pacific.Swiber Holdings and Ezra Holdings have a fleet of OCVs as well.
Companies operating in the subsea industry can generally be classifiedas operating in one or both segments: 1) larger jobs such as engineering,procurement and construction, and 2) relatively smaller ones such asinspection, repair and maintenance (IRM). Delays in the award of certainbig jobs this year have resulted in some bumpiness in earnings for theformer, while those that have a steady baseload of IRM work have seenmore stable recurring earnings.
Meanwhile project tendering activity has been buoyant, and vessels oncharter have generally enjoyed healthy day rates.
Outlook for high-end vessels remains brightWe anticipate the OCV fleet to continue to grow on long-termexpectations of investments in the offshore E&P sector. According toCleaves, the supply of high-end construction vessels is expected totighten towards 2014-2015, resulting in a noticeable increase innewbuilding activity. There is also a trend that new OCVs being orderedhave high specs for multi-role operations, making them versatile forwork in various segments and regions.
Exhibit B-12: Newbuild subsea vessels (global)
2013 2014 2015 2016 Total
CLV Cable Lay Vessel 1 2 0 0 3
CON Construction Vessel 5 16 6 1 28
DSV Diving Support Vessel 5 0 2 0 7Heavylift/
Pipelay Heavylift/Pipelay Vessel 4 5 1 0 10
LAYSV Pipelay Vessel 2 8 1 0 11
LCV Light Construction Vessel 3 4 2 1 10
MPSV 6 10 2 2 20
MSV 8 13 2 0 23
ROV ROV Support Vessel 0 1 0 0 1
Total 34 59 16 4 113
Vessel type
Multipurpose
Support Vessel
Source: Fearnley Offshore, Jun 2013
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Exhibit B-13: Outlook for certain regions
Source: Technip
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OFFSHORE SUPPORT VESSELS
AHTS is the predominant vessel in the regionOffshore Support Vessels (OSVs) are utilised in every part of the offshorevalue chain (Exhibit B-12) and the grey boxes illustrate the various kindsof vessels that are commonly used for each stage of the offshore fieldlifecycle. As shown, there is a wide range of OSVs, but in the Asian market,the more relevant vessel is still the anchor-handling tug supply (AHTS)vessel, which accounts for about 90% of the total fleet in the region.Platform supply vessels (PSV) make up about 10%, although interest inthis type of vessel has been growing.
Exhibit B-14: Uses of OSVs in different parts of the offshore value chain
Source: RS Platou
Concern of future overbuilding lingersThe concern, however, of future overbuilding remains. The increasingnumber of traditional shipowners who used to focus on bulk carriers andcontainerships and now looking to diversify into the offshore space maylead to more orders of offshore newbuilds. If demand does not keep inpace with the supply down the road, this would lead to lower utilisationand day rates. As of Sep 2013, there are about 436 additional AHTS andPSVs (~14% of the global fleet) under construction (Exhibit B-13). Theglobal fleet is estimated at about 2,997 vessels, including ~750 vessels(25%) that are at least 25 years old.
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Exhibit B-15: AHTS and PSVs built per year
Source: IHS Petrodata, Tidewater
Exhibit B-16: OSV newbuildings by country
Source: RS Platou
Positive on OSV market, owners of newer fleets preferredStill, we hold a positive view of the OSV market, as the growth of theoffshore drilling market and increasing base of production infrastructureunderpins potential increases in OSV newbuilds. Meanwhile, much like theoffshore drilling market, there has been a progressive trend towardsbifurcation in the OSV fleet as day rates and utilisation levels of newbuildand older vessels have diverged over the past few years.
Exhibit B-17: Demand drivers for the offshore support vessel market
Source: Pareto Research
0
50
100
150
200
250
300
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
No.ofvesselsbuilt(AHTS,
PSV)
Vessels > 25 yrs old
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OSV to rig ratio has been fallingAccording to IHS Petrodata, the OSV to rig ratio has fallen from 4.83 inJan 2011 to 4.20 in Sep 2013 in 2013 after rising for the past few years.This change, reflects a tilt in market balance that favours vessel owners.
Exhibit B-18: OSV to rig ratio
Jul 2008Peak
Jan 2011Trough
Aug 2012 Jan 2013 Sep 2013
Working Rigs 603 538 649 673 713
Rigs under construction 186 118 188 192 222
OSV global fleet 2,033 2,599 2,788 2,873 2,997
OSVs under construction 736 367 428 426 436
OSV/rig ratio 3.37 4.83 4.30 4.27 4.20 Source: IHS Petrodata
Exhibit B-19: No. of working rigs globally
400
253
0
50
100
150
200
250
300
350
400
450
Jan
04
Jul04
Jan
05
Jul05
Jan
06
Jul06
Jan
07
Jul07
Jan
08
Jul08
Jan
09
Jul09
Jan
10
Jul10
Jan
11
Jul11
Jan
12
Jul12
Jan
13
Jul13
No.ofworkingrigs
Jack-ups
Floaters
Source: Tidewater
SE Asia OSV prospects are bright
Within SE Asia, Malaysia and Indonesia have the greatest forecastedinvestment in the oil and gas industry, due to increasing urgency ofstemming production declines. Both countries are developing shallowwater plays, while also moving to deeper waters. Against such abackdrop, the current OSV fleet in these two countries is not sufficient inmeeting expected demand due to the old age of the current fleet andcharterers increasing demanding requirements, as well as the push foryounger and more eco-friendly vessels by regulators. About 12% of theOSV fleet in SE Asia (400 AHTS and PSVs, 800 other OSVs such as
Construction Support Vessels and Diving Support Vessels, crewboats etc)are past their useful economic life (>30 years), and about 21% arebetween 20-30 years old.
The cabotage laws of Malaysia and Indonesia have also meant that onlylocally-flagged vessels can operate in the respective countries, buoyingthe charter rates of such vessels and benefiting companies with exposureto these countries. These include Jaya Holdings and Marco Polo Marine.Nam Cheong Ltd has strong exposure to the OSV newbuild segment inMalaysia.
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SECTION C. SECTOR COVERAGE
Maintain OverweightGoing into 2014, we remain OVERWEIGHT on the oil and gas sector,though we point out that different segments of the value chainexperience different demand and supply dynamics. We expect that thefavourable oil price environment will continue to be conducive for overallcapital expenditure, but a key risk would be credit tightening given thecapital intensive nature of the industry. Considering the outlook of thevarious sub-segments as well as individual company positioningstrategies, our preferred picks for the broader sector are KeppelCorporation [BUY, FV: S$12.87], Sembcorp Marine [BUY, FV:S$5.68],Ezion Holdings [BUY, FV: S$2.57] and Nam Cheong Ltd [BUY, FV:S$0.37].
Exhibit C-1: Valuations
Shareprice
(S$)
MarketCap
(S$m)
HistoricalP/E
(x)
Current YrP/E
(x)
ForwardP/E
(x)
P/B
(x)
Latest FYRev
(LC$m)
Latest FYNet profit
(LC$m)
Currency offinancial
figures
OIR
rating
Large yards
Keppel Corp* 11.21 20,264 10.6 12.0 11.8 2.2 13,958.7 2,237.3 SGD BUYSembcorp Marine* 4.42 9,237 12.2 16.0 13.4 3.6 4,430.1 538.5 SGD BUY
COSCO Corp (S)* 0.73 1,635 15.4 14.8 12.1 1.2 3,734.3 105.7 SGD SELL
Yangzijiang* 1.175 4,522 7.0 7.2 8.0 1.3 13,183.8 3,580.8 RMB HOLD
Average 12.5 11.3 2.1
Small-mid sized yards
VARD* 0.8 944 7.0 6.9 5.8 1.3 11,129.0 902.0 NOK HOLD
Jaya Holdings 0.68 521 9.5 10.4 8.5 0.8 201.8 46.1 USD
Nam Cheong* 0.295 620 15.5 11.8 8.0 2.0 876.6 136.6 MYR BUY
Dyna-Mac Holdings* 0.4 397 13.3 15.4 13.3 2.2 215.3 28.4 SGD BUY
ASL Marine 0.66 279 8.6 6.5 6.1 0.7 465.4 45.3 SGD
Otto Marine 0.058 239 - - - 0.5 374.4 -103.1 USD
Triyards* 0.69 204 3.8 5.6 4.8 1.2 275.1 31.4 USD BUY
Marco Polo Marine 0.385 131 6.1 4.8 4.3 0.8 93.5 22.3 SGD
Average 8.8 7.2 1.2
Offshore charterers and service providers
Ezion Holdings* 2.04 2,358 18.8 12.1 9.5 2.5 158.7 78.8 USD BUY
Ezra Holdings* 1.32 1,287 16.0 19.2 14.9 1.1 1,262.1 53.6 USD SELL
Swiber Holdings* 0.64 388 7.0 6.0 5.3 0.7 952.2 45.7 USD HOLD
CH Offshore 0.425 300 - - - 0.9 47.8 -7.1 USD
Falcon Energy 0.37 303 23.1 - - 1.2 94.6 10.4 USD
Kreuz Holdings 0.79 437 7.3 7.2 6.3 1.9 193.4 39.7 USD
KS Energy* 0.5 259 55.9 45.0 21.5 0.8 698.1 1.3 SGD HOLD
Mermaid Maritime 0.40 558 78.0 46.1 13.9 0.7 5,714.1 71.5 THB
Average 22.6 11.9 1.2 *OIR coverageSource: Bloomberg, OIR estimates
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Company financial highlights
Company financial highlights
Income statement
Year ended 31 Dec (US$m) FY11 FY12 FY13F FY14F
Revenue 107.0 158.7 295.5 496.5
Gross profit 55.3 70.7 130.0 218.4
EBITDA 71.5 104.0 199.0 261.9
Net finance expense -0.7 -4.7 -9.9 -13.4
Share of results of JVs, net 9.5 16.9 31.8 31.8
Exceptionals 12.2 17.1 17.8 0.8
Profit before tax 61.0 82.8 161.2 207.1
Minority interests 0.0 0.0 0.0 0.0
Profit attributable to shareholders 58.1 78.8 155.6 198.8
Core net profit 45.9 61.7 137.8 198.1
Balance sheet
As at 31 Dec (US$m) FY11 FY12 FY13F FY14F
Cash and cash equivalents 63.2 134.9 127.2 206.2
Other current assets 64.2 137.8 177.3 203.5
Property, plant, and equipment 270.8 793.7 1,180.9 1,289.6
Total assets 470.4 1,198.0 1,653.8 1,867.6
Debt 157.7 552.4 843.7 843.7
Current liabilities excluding debt 42.4 80.7 92.3 150.5
Total liabilities 202.0 645.2 948.0 1,006.3
Shareholders equity 268.3 552.8 705.8 861.3
Total equity 268.3 552.8 705.8 861.3
Total equity and liabilities 470.4 1,198.0 1,653.8 1,867.6
Cash flow statementYear ended 31 Dec (US$m) FY11 FY12 FY13F FY14F
Op profit before working cap. changes 55.4 74.0 138.5 230.7
Working cap, taxes and int -20.9 16.9 -35.3 25.0
Net cash from operations 34.5 90.8 103.2 255.7
Purchase of PP&E -125.5 -604.6 -400.0 -150.0
Other investing flows 55.3 -47.4 -53.7 -53.3
Investing cash flow -70.3 -652.0 -453.7 -203.3
Financing cash flow 25.7 631.2 346.5 30.3
Net cash flow -10.1 70.1 -4.0 82.6
Cash at beginning of year 68.1 63.2 134.9 127.2
Cash at end of year (incl pledges) 63.2 134.9 127.2 206.2
Key rates & ratios FY11 FY12 FY13F FY14F
Core EPS 6.4 6.8 11.9 17.1
EPS (cents) 8.1 8.7 13.5 17.2
NAV per share (cents) 37.6 60.8 61.1 74.5
Net profit margin (%) 54.3 49.7 52.6 40.0
PER (x) 20.6 19.4 12.5 9.8
Price/NTA (x) 4.5 2.8 2.8 2.3
EV/EBITDA (x) 32.1 22.0 11.5 8.8
Dividend yield (%) 0.0 0.0 0.0 0.0
ROE (%) 21.7 14.3 22.0 23.1
Net gearing (%) 35.2 75.5 101.5 74.0
Sources: Company, OIR forecasts
8/13/2019 Oil and Gas Good Performance to Continue in 2014
21/29
Return of the jack-ups; aided by Mexico
After the order momentum for jack-up rigs slowed in 2012 with only five
orders for the whole year, this year saw the return of order flows with
Keppel Corporation (KEP) securing 13 units YTD. A substantial part of it wasfrom Mexico, which was within our expectations as we had been waiting for
the re-opening of Mexicos oil and gas industry to foreign companies to
benefit rigbuilders like KEP.
Strong O&M operating margin to sustain
Unlike in 2012 when group profits were boosted by project completions in
the property arm, the focus this year was on the strong operating margins
by the offshore and marine segment, which saw a bottom of 12.0% in 4Q12
after a period of normalization. Looking ahead, we expect 1) productivity
gains in local and overseas yards, and 2) the continued execution of repeat
units that KEP is familiar with to sustain margins.
Near Market, Near Customer strategy to position it well
We have always believed that KEPs Near Market, Near Customer strategy
will position it well in terms of new orders, especially in a time when local
content requirement is increasingly favoured by end customers. As such, we
are positive on KEPs recent announcement that it will jointly develop, own
and operate a yard facility in Mexico.
Maintain BUY
Meanwhile, construction for the first semi-submersible rig for Sete Brasil is
on track; it is expected to leave Singapore early next year and arrive at
Brazil around Feb 2014. KEP has secured S$6.4b of orders YTD, and its net
order book stood at S$13.6b as at end Sep with deliveries extending to
2019. Looking ahead, we are expecting new order wins of about S$6.75b in
2014 from the Caspian Sea, West Africa, Brazil and other regions. Maintain
BUYwith S$12.87 fair value estimate.
GOOD INDUSTRY AND CO-SPECIFICOUTLOOK Rig order momentum to continue S$13.6b net order book Superior execution ability
2 Dec 2013Company Update
KEPPEL CORPORATION | BUY
Asia Pacific Equity ResearchSingapore | Industrials
BUY (maintain)Fair value S$12.87
add: 12m dividend forecast S$0.47
versus: Current price S$11.31
12m total return forecast 18%
Analysts
Low Pei Han, CFA (Lead) +65 6531 9813
lowph@ocbc-research.com
Carey Wong +65 6531 9808
carey@ocbc-research.com
Key information
Market cap. (m) S$20,444 /
USD16,292
Avg daily turnover (m) S$40 /
USD32
Avg daily vol. (m) 3.7
52-wk range (S$) 10.01 - 11.513
Free float (%) 78.3
Shares o/s. (m) 1,807.6
Exchange SGX
BBRG ticker KEP SP
Reuters ticker KPLM.SI
ISIN code BN4
GICS Sector Industrials
GICS IndustryIndustrial
Conglomerates
Top shareholder Temasek - 21.3%
Relative total return 1m 3m 12m
Company (%) 4 12 13
STI-adjusted (%) 5 7 6
Price performance chart
2700
2980
3260
3540
3820
4100
9.66
10.52
11.37
12.23
13.09
13.95
Dec-12 Mar-13 Jun-13 Sep-13
Fair Value KEP SP FSSTI
Share Price (S$) Index Level
`
Sources: Bloomberg, OIR estimates
Industry-relative metrics
0th 25th 50th 75th 100th
PB
PE
ROE
Beta
MktCap
Industry Average Company
Percentile
Note: Industry universe defined as companies under identical GICS classification listed onthe same exchange.Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended Dec 31 (S$m) FY11 FY12 FY13F FY14F
Revenue 10,082.5 13,964.8 11,799.3 13,669.8
Operating profit 2,824.3 2,621.2 1,812.9 2,061.1
EBITDA 3,032.9 2,831.7 2,064.9 2,323.9
Profit attributable to shareholders 1,945.8 2,237.3 1,507.9 1,626.0
Core EPS (S cents) 89.5 105.6 83.4 90.0
Cons. EPS (S cts) na na 83.7 90.6
NTA per share (S$) 4.3 5.1 5.4 5.8
Net profit margin (%) 19.3 16.0 12.8 11.9
ROE (%) 25.3 24.2 15.2 15.2
Price/NTA (x) 2.5 2.1 2.0 1.9
Please refer to important disclosures at the back of this document. MCI (P) 004/06/2013
MARKET CAP: USD 16.3B AVG DAILY TURNOVER: USD 32M
8/13/2019 Oil and Gas Good Performance to Continue in 2014
22/29
OCBC Investment Research
Singapore Equities
2
Exhibit 1: Percentage contribution to net profit by business segments
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13F
Offshore and marine Property Infrastructure Investments
Source: Company, OIR
Exhibit 2: Order wins and net order book per year
0
2
4
6
8
10
12
14
16
2005 2006 2007 2008 2009 2010 2011 2012 2013F
S$b
Order wins
Orderbook (end of yr)
Source: Company, OIR
8/13/2019 Oil and Gas Good Performance to Continue in 2014
23/29
OCBC Investment Research
Singapore Equities
Company financial highlights
Company financial highlights
Income statement
Year Ended Dec 31 (S$m) FY11 FY12 FY13F FY14F
Revenue 10,082.5 13,964.8 11,799.3 13,669.8
Operating profit 2,824.3 2,621.2 1,812.9 2,061.1
EBITDA 3,032.9 2,831.7 2,064.9 2,323.9
Finance costs & invt income 40.3 32.5 31.6 30.1
Associates and JV 448.0 602.5 357.5 357.5
Exceptionals 1,135.3 339.2 0.0 0.0
Pre-tax profit (excl. EI) 2,177.4 2,917.0 2,202.1 2,448.7
Profit before tax 3,312.7 3,256.3 2,202.1 2,448.7
Minority interests -923.4 -518.3 -308.8 -333.0
Profit attributable to shareholders 1,945.8 2,237.3 1,507.9 1,626.0
Balance sheet
As at Dec 31 (S$m) FY11 FY12 FY13F FY14F
Cash and cash equivalents 3,020.5 4,055.2 5,050.1 4,895.6
Other current assets 9,614.7 10,551.4 8,613.5 9,979.0
Property, plant, and equipment 2,715.5 3,337.4 3,985.5 4,622.7
Total assets 25,099.3 29,170.5 29,233.5 31,358.2
Debt 4,877.2 7,207.9 7,207.9 7,207.9
Current liabilities excluding debt 8,194.3 8,058.7 7,168.9 8,184.1
Total liabilities 13,338.0 15,592.4 14,702.7 15,717.9
Shareholders equity 7,699.4 9,246.0 9,889.9 10,666.3
Total equity 11,761.3 13,578.1 14,530.9 15,640.3
Total equity and liabilities 25,099.3 29,170.5 29,233.5 31,358.2
Cash flow statementYear Ended Dec 31 (S$m) FY11 FY12 FY13F FY14F
Op profit before working cap. changes 1,988.4 2,640.0 2,117.3 2,378.9
Working cap, taxes and int -2,202.0 -1,632.0 -17.1 -1,368.3
Net cash from operations -223.8 1,006.6 2,100.2 1,010.6
Purchase of PP&E -875.8 -835.9 -400.0 -400.0
Other investing flows -382.0 -233.5 157.3 157.3
Investing cash flow -1,257.8 -1,069.4 -242.7 -242.7
Financing cash flow 275.1 1,277.5 -862.6 -922.4
Net cash flow -1,206.5 1,214.7 994.9 -154.5
Cash at beginning of year 4,245.3 3,020.5 4,055.2 5,050.1
Cash at end of year (incl ODs) 3,020.5 4,055.2 5,050.1 4,895.6
Key rates & ratios FY11 FY12 FY13F FY14F
Core EPS (S cents) 89.5 105.6 83.4 90.0
EPS (S cents) 109.1 124.5 83.4 90.0
NTA per share (S$) 4.3 5.1 5.4 5.8
Net profit margin (%) 19.3 16.0 12.8 11.9
PER (x) 9.9 8.7 13.0 12.0
Price/NTA (x) 2.5 2.1 2.0 1.9
EV/EBITDA (x) 7.0 8.0 10.5 9.4
Dividend yield (%) 4.0 6.7 4.4 4.3
ROE (%) 25.3 24.2 15.2 15.2
Net gearing (%) 24.1 34.1 21.8 21.7
Sources: Company, OIR forecasts
8/13/2019 Oil and Gas Good Performance to Continue in 2014
24/29
Quality OSV builder
We see Nam Cheong Limited as a key beneficiary of the trend towards
stronger demand for offshore support vessels (OSVs) which are more
sophisticated, younger and environmentally-friendly. In our opinion,Nam Cheong has established a solid track record in the construction of
such OSVs, and the fact that two-thirds of its sales come from repeat
customers bears testament to Nam Cheongs execution capabilities.
Being a Malaysian shipbuilder, the vessels which Nam Cheong builds
are all Malaysian registered, and this provides its customers with the
ability to operate in the cabotage-protected Malaysian oil and gas
industry.
Vessel sales to gain further traction in 2014
Nam Cheong reported a stellar 71.1% and 54.9% surge in its 9M13
revenue and PATMI to MYR851.3m and MYR135.2m, respectively,
underpinned by contribution from the 20 vessels it has sold YTD for an
aggregate amount of US$431.6m. Its net order book stood at
MYR1.4b as at end Sep 2013. For its 2014 shipbuilding programme,Nam Cheong has already managed to sell 16 of the 28 vessels which
are under construction. Given the uptick in the OSV market and the
positive attributes of Nam Cheong as highlighted earlier, we expect it
to maintain its track record of selling all its build-to-stock vessels prior
to their delivery.
Maintain BUY
We continue to like Nam Cheong for its dominant leadership position
in the OSV market and its compelling valuations. The stock is trading
at an attractive FY14F PER of 6.7x, representing a 25% discount to its
closest peer Coastal Contracts (listed on Bursa Malaysia), which we
believe is unjustified. Maintain BUY, with an unchanged fair value
estimate of S$0.37, pegged to 8.5x FY14 EPS.
FULL SPEED AHEAD Strong execution capabilities
Expect robust vessel sales ahead
Compelling valuations
2 Dec 2013Company Update
NAM CHEONG LIMITED | BUY
Asia Pacific Equity ResearchSingapore | Industrials
BUY (maintain)Fair value S$0.37
add: 12m dividend forecast S$0.009
versus: Current price S$0.29
12m total return forecast 31%
Analysts
Wong Teck Ching (Andy) (Lead) +65 6531 9817
andywong@ocbc-research.com
Low Pei Han, CFA +65 6531 9813
lowph@ocbc-research.com
Key information
Market cap. (m) S$609.9 /
USD486.0
Avg daily turnover (m) S$2 /
USD2
Avg daily vol. (m) 8.6
52-wk range (S$) 0.23 - 0.3
Free float (%) 40.6
Shares o/s. (m) 2,103.1
Exchange SGX
BBRG ticker NCL SP
Reuters ticker NMCG.SI
ISIN code NE4
GICS Sector IndustrialsGICS Industry Machinery
Top shareholderSK Tiong Enterprise -
27.3%
Relative total return 1m 3m 12m
Company (%) 2 9 26
STI-adjusted (%) 3 5 18
Price performance chart
0.22
0.26
0.30
0.35
0.39
0.43
Dec-12 Mar -13 Jun-13 Sep-13
2700
3280
3860
4440
5020
5600
Fai r Value NCL SP FSSTI
Shar e Pr i ce (S$ ) Index Level
`
Sources: Bloomberg, OIR estimates
Industry-relative metrics
0th 25th 50th 75th 100th
PB
PE
ROE
Beta
Mkt Cap
Compan y I n dust r y A ver age
Percent i le
Note: Industry universe defined as companies under identical GICS classification listed onthe same exchange.Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended Dec 31 (MYR'm) FY11 FY12 FY13F FY14F
Revenue 606.2 876.6 1,287.6 1,698.1
Gross profit 137.8 188.7 271.0 352.2
Operating Profit 104.8 143.7 203.4 257.1
PATMI 93.2 136.6 187.3 232.8
EPS (MYR sen) 4.9 7.1 8.9 11.1
Cons. EPS (MYR sen) na na 8.6 10.9
PER (x) 14.5 10.0 8.2 6.7
Price/NTA (x) 2.8 2.3 2.1 1.7
EV/EBITDA (x) 16.4 11.7 8.5 6.5
ROE (%) 20.8 25.6 28.1 27.9
Please refer to important disclosures at the back of this document. MCI (P) 004/06/2013
MARKET CAP: USD 486M AVG DAILY TURNOVER: USD 2M
8/13/2019 Oil and Gas Good Performance to Continue in 2014
25/29
OCBC Investment Research
Singapore Equities
Company financial highlights
Company financial highlights
Income statement
Year Ended Dec 31 (MYR'm) FY11 FY12 FY13F FY14F
Revenue 606.2 876.6 1,287.6 1,698.1
Gross profit 137.8 188.7 271.0 352.2Selling and Administrative Expenses -36.1 -50.1 -72.1 -96.8
Operating Profit 104.8 143.7 203.4 257.1
Finance Costs -5.0 -7.8 -10.6 -17.0
Associates and Jointly Controlled Entities 1.5 2.7 2.6 2.7
Profit Before Tax 101.3 138.6 195.4 242.8
Tax -8.1 -2.0 -6.8 -8.5
Non-controlling Interest 0.0 0.0 1.2 1.5
PATMI 93.2 136.6 187.3 232.8
Balance sheet
As at Dec 31 (MYR'm) FY11 FY12 FY13F FY14F
Cash and Cash Equivalents 27.0 216.3 483.1 520.2
Other Current Assets 798.0 928.2 1,101.5 1,333.4
Property, Plant & Equipment 127.7 152.7 225.3 244.4
Other Non-current Assets 8.8 8.6 11.2 13.9
Total Assets 961.5 1,305.8 1,821.0 2,111.9
Current Liabilities less Debt 152.8 257.6 322.3 425.0
Total Debt 325.6 442.5 739.3 739.3
Total Liabilities 487.4 713.6 1,077.2 1,181.9
Shareholders Equity 474.1 592.2 742.6 927.3
Total Equity and Liabilities 961.5 1,305.8 1,821.0 2,111.9
Cash flow statement
Year Ended Dec 31 (MYR'm) FY11 FY12 FY13F FY14F
Profit Before Tax 101.3 138.6 195.4 242.8
Working Capital Changes -50.1 -63.3 -106.4 -127.3
Net Cash from Operations 37.5 75.8 86.8 115.1
Capex -6.7 -18.2 -80.0 -30.0
Investing Cash flow -6.7 -10.1 -79.9 -29.9
Financing Cash Flow -54.8 122.7 259.9 -48.1
Net Cash Flow -24.0 188.4 266.8 37.1
Cash at Beginning of Year 44.7 22.5 210.9 477.7
Cash at End of Year 22.5 210.9 477.7 514.8
Cash and Cash Equivalents 27.0 216.3 483.1 520.2
Key rates & ratios FY11 FY12 FY13F FY14F
EPS (MYR sen) 4.9 7.1 8.9 11.1
NTA/share (MYR sen) 24.8 31.0 35.3 44.1
PER (x) 14.5 10.0 8.2 6.7
Price/NTA (x) 2.8 2.3 2.1 1.7
EV/EBITDA (x) 16.4 11.7 8.5 6.5
Dividend Yield (%) 0.7 1.7 2.4 3.1
ROA (%) 9.6 12.0 12.0 11.8
ROE (%) 20.8 25.6 28.1 27.9
Net Gearing (%) 63.0 38.2 34.5 23.6
Net Margin (%) 15.4 15.6 14.5 13.7
Sources: Company, OIR forecasts
8/13/2019 Oil and Gas Good Performance to Continue in 2014
26/29
Record high order book in 2013; lower margins
2013 has been a record year in terms of the net order book for Sembcorp
Marine (SMM) its backlog stood at S$13.5b as at 5 Nov 2013, exceeding
last years close of S$12.7b. Though it is also the year in which the groupdelivered weaker operating margins than fellow rigbuilder Keppel Corp, we
believe it is unfair to compare the two as SMM was mainly executing
relatively new-rig-type projects this year (resulting in more conservative
initial profit recognition), whereas KEP was mainly delivering its
proprietary rig designs that it is familiar with.
Focus on margins, order intake, drillships and Tuas yard
Moving into 2014, we expect the market to focus on operating margins,
order intake, the construction of SMMs drillships and operation of the new
Tuas yard. As drillship orders make up slightly less than SMMs net order
book as at Nov 2013, the market is likely to pay close attention on the
construction of SMMs first drillship. We saw a significant increase in ship
repair revenues in 3Q13 though the new Tuas yard started only in Aug
2013. As operations ramp up, we believe ship repair growth will continue
and expect about S$900m of repair revenue in FY14 vs S$650-700m in
FY13F.
Keeping an eye on competition
We also expect investors to keep an eye on the commercial shipbuilding
market, though SMM does not build newbuilds in this area. This is because
there are concerns that work-starved yards in Korea and China may be
keen to accelerate their diversification into the offshore space, therefore
intensifying competition in the newbuild rig market. Still, we expect that
clients who are more established players would prefer to stick to SMM and
Keppel Corp for quality high spec rigs. Maintain BUYwith S$5.68 fair
value estimate.
FOCUS ON MARGINS AND NEW YARDIN 2014 Record order book in 2013 New order momentum to continue New yard starts operations
2 Dec 2013Company Update
SEMBCORP MARINE | BUY
Asia Pacific Equity ResearchSingapore | Industrials
BUY (maintain)Fair value S$5.68
add: 12m dividend forecast S$0.130
versus: Current price S$4.44
12m total return forecast 31%
Analysts
Low Pei Han, CFA (Lead) +65 6531 9813
lowph@ocbc-research.com
Carey Wong +65 6531 9808
carey@ocbc-research.com
Key information
Market cap. (m) S$9,279 /
USD7,394
Avg daily turnover (m) S$16 /
USD13
Avg daily vol. (m) 3.7
52-wk range (S$) 4.13 - 4.847
Free float (%) 39.2
Shares o/s. (m) 2,089.8
Exchange SGX
BBRG ticker SMM SP
Reuters ticker SCMN.SI
ISIN code S51
GICS Sector IndustrialsGICS Industry Machinery
Top shareholderSembcorp Industries-
60.8%
Relative total return 1m 3m 12m
Company (%) -2 5 0
STI-adjusted (%) -1 1 -7
Price performance chart
2700
3040
3380
3720
4060
4400
4.06
4.51
4.96
5.41
5.86
6.31
Dec-12 Mar-13 Jun-13 Sep-13
Fair Value SMM SP FSSTI
Share Price (S$) Index Level
`
Sources: Bloomberg, OIR estimates
Industry-relative metrics
0th 25th 50th 75th 100th
PB
PE
ROE
Beta
Mkt Cap
Industry Average Company
Percentile
Note: Industry universe defined as companies under identical GICS classification listed onthe same exchange.Sources: Bloomberg, OIR estimates
Key financial highlights
Year Ended Dec 31 (S$m) FY11 FY12 FY13F FY14F
Revenue 3,960.2 4,430.1 5,093.6 6,513.1
Gross profit 866.1 694.5 662.2 944.4
EBITDA 823.4 644.8 737.0 970.5
Profit attributable to shareholders 751.9 538.4 518.3 677.8
Earnings per share (S cents) 36.1 25.8 24.8 32.5
Cons. EPS (SG cents) na na 25.6 31.6
Net profit margin (%) 19.4 12.8 10.7 11.0
PER (x) 12.3 17.2 17.9 13.7
ROE (%) 31.9 23.3 20.3 23.1
EV/EBITDA (x) 11.3 14.4 12.6 9.5
Please refer to important disclosures at the back of this document. MCI (P) 004/06/2013
MARKET CAP: USD 7.4B AVG DAILY TURNOVER: USD 13M
8/13/2019 Oil and Gas Good Performance to Continue in 2014
27/29
8/13/2019 Oil and Gas Good Performance to Continue in 2014
28/29
OCBC Investment Research
Singapore Equities
Company financial highlights
Company financial highlights
Income statement
Year Ended Dec 31 (S$m) FY11 FY12 FY13F FY14F
Revenue 3,960.2 4,430.1 5,093.6 6,513.1
Gross profit 866.1 694.5 662.2 944.4
Operating and admin expenses -129.0 -140.3 -52.4 -144.3
EBITDA 823.4 644.8 737.0 970.5
Operating profit 737.1 554.2 609.7 800.1
Other expenses/income 59.9 19.2 4.1 11.2
Associates 62.9 56.3 21.3 29.1
Pre-tax profit 859.9 629.6 635.1 840.4
Profit for the year 769.1 567.4 546.2 714.3
Profit attributable to shareholders 751.9 538.4 518.3 677.8
Balance sheet
As at Dec 31 (S$m) FY11 FY12 FY13F FY14F
Cash and cash equivalents 1,989.6 1,408.9 1,607.4 1,929.9
Other current assets 1,409.3 2,232.0 2,297.2 2,579.2
Property, plant, and equipment 1,034.3 1,476.2 1,945.0 2,097.7
Total assets 5,051.6 5,786.5 6,512.4 7,370.9
Debt 48.8 378.7 600.0 500.0
Current liabilities excluding debt 2,365.1 2,685.2 2,915.1 3,430.6
Total liabilities 2,545.6 3,239.4 3,690.6 4,106.1
Shareholders equity 2,414.3 2,438.5 2,685.4 3,091.9
Total equity 2,506.1 2,547.0 2,821.8 3,264.8
Total equity and liabilities 5,051.6 5,786.5 6,512.4 7,370.9
Cash flow statementYear Ended Dec 31 (S$m) FY11 FY12 FY13F FY14F
Op profit before working cap. changes 852.5 670.6 763.9 1,005.8
Working cap, taxes and int -526.4 -463.1 -44.8 -61.9
Net cash from operations 326.1 207.5 719.0 943.8
Purchase of PP&E -437.9 -516.8 -600.0 -300.0
Other investing flows -39.1 -9.8 100.0 50.0
Investing cash flow -477.1 -526.6 -500.0 -250.0
Financing cash flow -774.5 -231.9 -50.1 -371.4
Net cash flow -925.5 -551.1 168.9 322.5
Cash at beginning of year 2,915.1 1,989.6 1,408.9 1,607.4
Cash at end of year 1,989.6 1,408.9 1,607.4 1,929.9
Key rates & ratios FY11 FY12 FY13F FY14F
Earnings per share (S cents) 36.1 25.8 24.8 32.5
NTA per share (S cents) 114.2 115.2 127.2 146.8
Gross profit margin (%) 21.9 15.7 13.0 14.5
Net profit margin (%) 19.4 12.8 10.7 11.0
PER (x) 12.5 17.4 18.1 13.9
Price/NTA (x) 3.9 3.9 3.5 3.1
EV/EBITDA (x) 11.4 14.6 12.7 9.7
Dividend yield (%) 5.6 2.9 2.9 2.9
ROE (%) 31.9 23.3 20.3 23.1
Net gearing (%) Net cash Net cash Net cash Net cash
Sources: Company, OIR forecasts
8/13/2019 Oil and Gas Good Performance to Continue in 2014
29/29
OCBC Investment Research
Singapore Equities
SHAREHOLDING DECLARATION:
The analyst/analysts who wrote this report holds/holdNILshares in the above security.
DISCLAIMER FOR RESEARCH REPORT
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RATINGS AND RECOMMENDATIONS:
- OCBC Investment Researchs (OIR) technical comments and recommendations are short-term and trading oriented.- OIRs fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month investment horizon.- As a guide, OIRs BUY rating indicates a total return in excess of 10% based on the current price; a HOLD rating indicates totalreturns within +10% and -5%; a SELL rating indicates total returns less than -5%.
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Carmen LeeHead of Research
For OCBC Investment Research Pte Ltd
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