Seatrium Limited (formerly SembCorp Marine and KOM)

I would avoid all O&G support industry players.

The O&G replacement cycle has been over extended and I think too many take for granted that it may continue.

Kep Corp, Semb Corp (formerly Sembawang Shipyard) and Semb Marine (Jurong Shipyard) went through a very bad patch in the 90s.

While oil prices are unlikely to revisit those dark ages, I suspect that equipment should be quite adequate to support ongoing E&P for at least the next 15 - 20 years after all these years of renewal.

I used to be covering FELS and they were into power barges in Philippines when they had practically nothing to do back then. It was due to their forays into Philippines power that I shot down VD Horst, an high flying Indonesian back counters backed by Peter Lim and fronted by Kotjo.

Competition is certainly very high in the O&G sector globally now. It is not as safe as it what it protrayed based on last 10 years of excellent track record that happened to coincide with the golden era. If one extend beyond that era, then you will see nothing but hope against unknown.

I have no doubt with the quality of Kep and Semb. However, one should not be too blinded by the global force and headwinds vs an golden era of track record.

Odd Lots
Vested
All
GG

(03-10-2014, 10:14 PM)greengiraffe Wrote: I would avoid all O&G support industry players.

The O&G replacement cycle has been over extended and I think too many take for granted that it may continue.

Kep Corp, Semb Corp (formerly Sembawang Shipyard) and Semb Marine (Jurong Shipyard) went through a very bad patch in the 90s.

While oil prices are unlikely to revisit those dark ages, I suspect that equipment should be quite adequate to support ongoing E&P for at least the next 15 - 20 years after all these years of renewal.

I used to be covering FELS and they were into power barges in Philippines when they had practically nothing to do back then. It was due to their forays into Philippines power that I shot down VD Horst, an high flying Indonesian back counters backed by Peter Lim and fronted by Kotjo.

Competition is certainly very high in the O&G sector globally now. It is not as safe as it what it protrayed based on last 10 years of excellent track record that happened to coincide with the golden era. If one extend beyond that era, then you will see nothing but hope against unknown.

I have no doubt with the quality of Kep and Semb. However, one should not be too blinded by the global force and headwinds vs an golden era of track record.

Odd Lots
Vested
All
GG

Just to share my opinion.
In this industry, one have to look at the age of the rigs in service vs how many new rigs to be rolled out (shallow water, semi submersible, etc).
They are about 1/3 of the rigs which are >30 years. Will these be replaced or refurbish to extend their service life? It mainly depends on oil demand/oil price, which will deter the investment in equipments.

Looking at Keppel FEL and SMM, apart from their large book order, what are they currently doing now to ensure they will survive or rather potentially increase their earning/revenue as compared to the rest?

What business moat have they craved out now?
What strategic placement have they made in recent years?
Will they survive? My answer is yes, at least for the next 5 years. Its just how much will they make.

Note: They are not just purely rig builder, they do ship repairs, conversion, FPSO, etc.

Cheers

semb marine is a cash cow
and currently they are in net cash position with a strong order book

they will surely survive well, at least for the next 5 years

Using Gordon Dividend Growth Model, value of SembCorp Marine is estimated to be btw $1.2 - $1.33 assuming growth rate to be 2-3%.

and please show the details here?

Take past year's earnings, payout ratio, beta of stock, growth estimate. Google for it to find more detailed explanations and auto calculator.

Preliminary findings which I used to screen stocks before going in for more details if it is attractive enough.

Not saying it is a good/bad stock, can never tell. Hope it helps.

(04-10-2014, 02:52 PM)Redcape Wrote: Take past year's earnings, payout ratio, beta of stock, growth estimate. Google for it to find more detailed explanations and auto calculator.

Preliminary findings which I used to screen stocks before going in for more details if it is attractive enough.

Not saying it is a good/bad stock, can never tell. Hope it helps.

Just to share my opinion, SMM is in a cyclical industrial, I don't recommend to use Gordon Dividend Growth Model. You might want to find out more what this model is suitable for.

Certain valuation methods could only be use in certain industrial, you don't apply blindly.

Cheers

Preliminary findings.

Point taken. A healthy discussion nonetheless.

   

Yeah true, I do find semb marine to be very cyclical

over the last 8 years (2006 to now 2014) the price has gone no where and is now still stuck at $3.50 level

Highs $6.00
Lows $1.50

Think maybe this stock not so suitable for us value investors
more for traders I guess

(04-10-2014, 09:19 PM)LLS Wrote: Yeah true, I do find semb marine to be very cyclical

over the last 8 years (2006 to now 2014) the price has gone no where and is now still stuck at $3.50 level

Highs $6.00
Lows $1.50

Think maybe this stock not so suitable for us value investors
more for traders I guess

You might want to find out what is value investing about.
I invest in any quality company which is undervalued based on my investment criteria.
I will be the contrarian value investor if opportunity arises.

Cheers