Keppel Limited

[NTL]

This is expected, without the HUGE contribution from the property side. Nevertheless, the 30c final dividend will be most welcomed by the shareholders.

[NTL]

Another order for Keppel. This time, US$650M.

http://infopub.sgx.com/FileOpen/MR_Keppe...eID=274454

[promptpost]

Another order for Keppel. This time, US$650M.

http://infopub.sgx.com/FileOpen/MR_Keppe...eID=274454

No flow through benefits in current financial year right?

[CityFarmer]

Keppel's KFELS is moving up the value chain, and getting more sophisticated. China and Korea competitors are still way to catch-up, IMO.

(not vested)

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Keppel to build 500 feet water depth jackup worth US$500 million for China waters
Built to the KFELS N Plus design, the ultra-high specification jackup rig will be one of the first with the ability to work in such deep water depths
...
Ref: http://infopub.sgx.com/FileOpen/2014.03....eID=277242

[CityFarmer]

Keppel extends into China. It will compete directly with China shipbuilders e.g. YZJ...

(not vested in Keppel, but in YZJ)

Keppel extends near market, near customer strategy into China

Singapore, 9 April 2014 - Keppel Offshore & Marine Ltd (Keppel O&M), through its wholly owned subsidiary, FELS Offshore Pte Ltd, has signed a management services agreement with Titan Petrochemicals Group Limited (Titan) - a company in which commodities trading conglomerate Guangdong Zhenrong Energy Co. Ltd. (GDZR) is a major shareholder - and Titan Quanzhou Shipyard Co. Ltd (TQS), to manage the TQS shipyard.
TQS, located in Quanzhou in Fujian Province, is one of the largest shipyards in China, occupying a total area of 110ha with 3,600m length of coastline.
...
http://infopub.sgx.com/FileOpen/MR.Keppe...eID=290676

[greengiraffe]

Keppel's China deal turns threat into opportunity:Analysts
Published on Apr 11, 2014
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A Keppel yard in Singapore. Keppel Corp said on Wednesday that it had signed a 30-year agreement with Titan Petrochemicals Group to manage the Titan Quanzhou Shipyard in Fujian province, one of the largest shipyards in China. The deal allows Keppel to tap China's growing offshore market through its new partner. -- PHOTO: KEPPEL CORP

By Yasmine Yahya

THE move by Keppel Corp to tie up with a Chinese shipyard is a smart manoeuvre that turns a threat into an opportunity, analysts said.

Foreign players have traditionally been at a disadvantage in China's growing offshore market as energy majors there tend to prefer locally built rigs.

But Keppel's deal allows it to tap this market through its new partner, they said in reports yesterday.

And it is a market with big potential - in its five-year plan laid out in 2011, the Chinese government said it plans to more than double investments into offshore energy exploration and production to 300 billion yuan (S$60 billion).

Keppel said on Wednesday that it had signed a 30-year agreement with Titan Petrochemicals Group to manage the Titan Quanzhou Shipyard (TQS) in Fujian province.

TQS is one of the largest shipyards in China, occupying a total area of 110 hectares with 3,600m of coastline.

Under the agreement, the partners will undertake projects based on Keppel's own designs as well as repair and conversion work.

"We believe the agreement further strengthens Keppel's 'near market, near customer' strategy to meet customer demand for localisation of rig construction," wrote Credit Suisse analysts Gerald Wong and Louis Chua in a note yesterday.

Chinese shipyards have made significant gains in the global rig-building market, they added, securing 45 per cent of all orders placed last year.

That exceeded the market share of Singapore yards, which won 33 per cent of orders, they added.

"The increasing prominence of Chinese yards is reflected particularly in the jack-up market. Of the 80 jack-up rigs ordered in 2013, 42 were secured by the Chinese yards, 31 by Singapore yards and seven by others."

Citi analysts Horng Han Low and Si Xian Goh agreed that Keppel's partnership with Titan is a win-win that enables it to tap the surging demand for offshore products in China.

"State-owned oil companies in China are supportive of its local industries," they wrote.

The ability to deliver locally built rigs would enable Keppel to capture a larger share of this new and fast-growing market without cannibalising orders to its Singapore operations, they added.

The latest agreement comes on the heels of Keppel's move to expand its yard in Nantong and a recent US$500 million (S$630 million) jack-up order secured from China's TS Offshore, they noted.

"We therefore view Keppel's agreement with Titan as a further gearing up of its arsenal to finesse its ability to compete in the potentially lucrative Chinese market."

yasminey@sph.com.sg

[CityFarmer]

Keppel's China deal turns threat into opportunity:Analysts
Published on Apr 11, 2014
PRINT EMAIL

A Keppel yard in Singapore. Keppel Corp said on Wednesday that it had signed a 30-year agreement with Titan Petrochemicals Group to manage the Titan Quanzhou Shipyard in Fujian province, one of the largest shipyards in China. The deal allows Keppel to tap China's growing offshore market through its new partner. -- PHOTO: KEPPEL CORP

Keppel seems doing the right thing, to compete on the same turf with China shipbuilders. The cost structure is pretty different between Singapore yards and China yards.

I am not sure the Titan Petrochemicals Group has the same support from authority, both on cheap credit, as well as financial support to orders. With its position as one of the largest shipyard in China, the company might have the same status as YZJ.

SembMarine management team's life is getting harder...

(not vested)

[AlphaQuant]

Quite a smart move i think. Decent coverage from JP below:

***************

Keppel management held a briefing to detail its strategy related to its agreement with TQS Shipyard in China.

· Access to growing offshore sector in China. Keppel’s move to manage a yard in China gives it access to China’s growing offshore market. As China’s policy dictates that only Chinese owned yards can secure jobs from China’s rig owners, Keppel has not acquired its own yard, but entered into management agreement (KEP has such agreements in Qatar, Caspian as well).

· No minimum local content requirement for China “offshore” jobs. China does not have a minimum local content rule in place, which provides Keppel (via TQS) with an opportunity to outsource the more complex aspects of jobs involving Keppel’s design and intellectual property to Singapore. With no local content rule, we see Keppel to be better positioned to protect its intellectual property rights.

· Two bites of the cherry for Keppel. Keppel will enjoy double benefit from managing the TQS yard via a) an annual fee for managing and operating the yard b) variable fees where Keppel will receive a share of profit along with benefit from subcontracting.

· Keppel drives the bus, but capex to be incurred by Titan: Keppel will be fully responsible for managing and operating the yard along with negotiating and sourcing the orders. The yard will work only on jobs sourced by Keppel. Moreover, yard capex will be incurred fully by Titan (owner of the yard) and not Keppel.

· Possible subcontracting of “lower value” jobs from Singapore to China? As China enjoys lower labour costs, we see a possibility where Keppel subcontracts its lower value jobs to China from Singapore. However, management has not provided any clarity on this aspect.

· Key SOE partner in place: Guangdong Zhenrong Energy Co Ltd, China’s state owned company is a major shareholder of Titan Petrochemicals (which owns TQS shipyard). Guangdong Zhenrong Energy specializes in the trade and investment of energy commodities including oil, metals and coal. The company recorded a total trade volume of RMB62bn in 2012. We see the presence of an SOE as a positive for Keppel.


Investment Thesis
We remain Overweight on Keppel as we continue to see strong order momentum in jackups (65 jackups ordered in 2013 globally). Keppel remains our top pick among Singapore rig builders due to: i) better O&M margins forecasted over the next 1-2 years as Brazil will act as baseload; ii) product mix as Keppel enjoys orders in FLNG market; iii) potential drillship/FLNG orders; and iv) orders expected from Mexico as it sets up a yard.

Valuation
Our Dec-14 PT of S$13.50 is based on our sum-of-the-parts valuation with a DCF-based calculation for the rig-building business and a 12x P/E for ship repair and other businesses, in line with the historical average for the repair business. We value property (Keppel Bay) at NAV and Keppel Land at our PT. Finally, we value the infrastructure business at 1.5x book.

[CityFarmer]

AmFraser analyst report on the company. Keppel is still leading in term of technologies, over China and Korea competitors...

(not vested)
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KEPPEL DELIVERS WORLD'S LARGEST JACK‐UP RIG
The world's largest jack‐up rig, the Maersk Intrepid, was recently
delivered to Maersk Drilling for deployment to the Norwegian North
Sea. Keppel FELS began building the DNV (Det norske Veritas)‐class
rig last year at its shipyard in Singapore.
With a rated drilling depth of 12,000 metres, the Maersk Intreprid is
well‐geared to drill in ultra‐harsh environments and can
accommodate up to 150 crew in one‐man cabins.
It is the first in a series of four newbuild ultra‐harsh environment jack
‐up rigs to enter Maersk Drilling's fleet in 2014‐16. The first three
jack‐up rigs, including Maersk Intrepid, are from the Keppel FELS
shipyard for delivery in 2014‐2015, and the fourth will be delivered
from the Daewoo Shipbuilding and Marine Engineering shipyard in
South Korea in 2016.
The four rigs represent a total investment of US$2.6 billion. With a
leg length of 206.8 metres, they are the world's largest jack‐up rigs
and are designed for year‐round opera?on in the North Sea, in water
depths of up to 150 metres.
The development is another feather in the cap of Keppel. In 2013,
Keppel Offshore & Marine (Keppel O&M) delivered 22 newbuild rigs,
21 of which were built by its subsidiary, Keppel FELS. This was a
world record as it is the largest number of rigs to be delivered by a
single company within a year.
From 2000 to the first quarter of 2014Keppel O&M has delivered
more than 40 per cent of the jack‐ups to enter the market. It has also
delivered more than 30 per cent of the semisubmersible rigs to enter
the market in the same period.
Keppel and Maersk Drilling have joined hands to build 12 new rigs todate.
The first of Maersk Drilling's ultra‐harsh environment jack‐up is
expected to be deployed next week to commence a four‐year
contract with Total E&P Norge. The Maersk Intrepid will be drilling
the demanding wells on the Mar?n Linge field development in the
Norwegian North Sea. The es?mated value of the firm contract is
US$550 million with the possibility for extension of four one‐year
op?ons.

http://remisiers.org/cms_images/research...g_Buzz.pdf

[kayhian]

Keppel Corp’s first-quarter net profit fell 5 per cent from a year ago to S$339 million despite group revenue rising 8.6 per cent to S$2.996 billion.

Keppel Corp said in a statement on Wednesday the lower profit was due to one-off gains booked in the same period last year.

Profit for the first quarter of 2013 was higher due mainly to the reversal of provision in Keppel Infrastructure following the finalisation of the sale of the power barge.

Excluding the one-off gains, Keppel Corp's CEO Loh Chin Hua said that the group's net profit "is largely in line with Q1 2013".

Revenue from Keppel's Offshore & Marine Division grew by S$217 million to S$1.9 billion due mainly to higher revenue recognition from ongoing projects.

The Offshore & Marine Division has also secured S$1.9 billion of new orders in the first quarter of 2014.

Its net order book stood at S$14.4 billion with deliveries extending into 2019.

Meanwhile, the property division's revenue improved by S$32 million to S$330 million.

This came on the back of an upswing of revenue from China but partially offset by lower contributions from Singapore.

Looking ahead, Keppel said despite the challenges and the expected uneven global recovery, it will continue to seize opportunities with prudent financial discipline and innovation.