Tuesday, July 5, 2016

What's Keppel’s edge over SembMarine?

When it comes to Singapore listed marine stocks, UOB-Kay Hian prefers Keppel Corp over Sembcorp Marine, thanks to the diversified nature of Keppel’s group business that helps offset the pain of the oil price decline.

To be sure, both Keppel and SembMarine are the world's top most rig builders. However,  their earnings have taken a hammering as the slump in oil prices since mid-2014 forced oil and gas companies to cut capital expenditure and cancel or delay rig contracts.

UOB-Kay Hian prefers Keppel over SembMarine as Keppel has expanded into property and infrastructure, containing the fallout from spiralling oil prices.

UOB-Kay Hian has a “hold” rating for both Keppel and Sembcorp Marine but target prices of $6.40 and $1.27 respectively.

Keppel and Sembcorp Marine are trading at $5.57 and $1.57 respectively.

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