Keppel Limited

[RBM]

Isn’t Keppel Corporation a prime example of a successful company that went and got itself into businesses for which it had neither the necessary depth or breadth of expertise? I agree 100% with everything that dydx states in his post above. 

Another example is Kris Energy. Yes, Keppel knows how to build and refurbish offshore Drilling Rig’s and FPSO’s ..... but apart from one Board Member, albeit a hugely talented one: Tan Eh Kia, Keppel has zero knowledge of how to run an Upsteam Oil and Gas business - a Company where skilled exploration (read: risky), development (read: capital intensive) and operating/maintenance (read: in-depth skills) of oil and gas fields is required. Keppel Corp’s KrisEnergy losses are staggering ....... and they are still mounting. I submit that Keppel’s Management and Board failed to grasp the challenges they were taking-on when they invested in Kris Energy.

Vested...... in Keppel Corp that is (not in Kris Energy).

[¯|_(ツ)_/¯]

Keppel Oil & Gas Pte Ltd (“KOG”) owns approximately 39.81% of the shares in the Company. According to the listing rules, this makes it a controlling shareholder of KrisEnergy. It also holds approximately 76% of the Zero Coupon Notes. Accordingly, KOG is likely to be considered a related creditor of KrisEnergy and KOG’s vote in its capacity as a Zero Coupon Noteholder is likely to be significantly discounted in a scheme of arrangement.

Based on discussions with Keppel Corporation Limited (“Keppel”), they may not be supportive of the restructuring process if KOG’s legitimate right to vote in relation to the Zero Coupon Notes was prejudiced. A CSE for the Zero Coupon Noteholders has been determined by the Board of KrisEnergy to provide the best chance of a successful restructuring of the Zero Coupon Notes and therefore supports an overall consensual restructuring. KrisEnergy’s board’s position is that if Keppel is no longer supportive of the restructuring, it will fail. Based on the valuations prepared so far, if the restructuring fails and KrisEnergy is liquidated, the unsecured creditors and the shareholders are likely to have zero returns. The vast majority of the value in the KrisEnergy Group will then go to the first-ranking secured creditor under the RCF, with potentially some residual value for Zero Coupon Noteholders as the second-ranking secured creditors, though it is likely that there will be no returns for the Zero Coupon Noteholders. The Company wishes to avoid this situation.
https://links.sgx.com/FileOpen/KrisEnerg...eID=630659

Stay home and stay safe, everyone.

[weijian]

Isn’t Keppel Corporation a prime example of a successful company that went and got itself into businesses for which it had neither the necessary depth or breadth of expertise? I agree 100% with everything that dydx states in his post above. 

Another example is Kris Energy. Yes, Keppel knows how to build and refurbish offshore Drilling Rig’s and FPSO’s ..... but apart from one Board Member, albeit a hugely talented one: Tan Eh Kia, Keppel has zero knowledge of how to run an Upsteam Oil and Gas business - a Company where skilled exploration (read: risky), development (read: capital intensive) and operating/maintenance (read: in-depth skills) of oil and gas fields is required. Keppel Corp’s KrisEnergy losses are staggering ....... and they are still mounting. I submit that Keppel’s Management and Board failed to grasp the challenges they were taking-on when they invested in Kris Energy.

Vested...... in Keppel Corp that is (not in Kris Energy).

In the good old days when oil prices were up, the Chinese shipyards were starting to catch up to the Singaporean blue chip rig builders. The Chinese shipyards were poaching their staff, and dangled cheap prices with delayed financing schemes.

For Keppel, when oil prices were good (read: available cash) and cheaper competitors intensifying the price wars, it may have made strategic sense to invest downstream in your business - in the name of having a captive customer. Floatel ordered 5 rigs from Keppel after all. Investing in an E&P company like Kris Energy in 2012, was essentially a double down on their O&G exposure.

It is tricky when we try to judge decisions only through the results, especially when there are alternate histories possible (Nassim Taleb's favorite). For example, what would have happened if the oil crash of 2015 never materialized and prices stayed in the 80-100usd/barrel range? Wouldn't Keppel actually doubled their profits (through their additional exposure mentioned earlier) and defended their order book?

I have read biographies of successful and failed businesses. There is really no successful formula that works all the time. Alot of times, it depends on the execution and what more, the macro environment. And sometimes, the reason that made you successful in the first place, would be the same reason that sinks you when you are successful.

My conclusion is that things are probably 80% luck + 20% skill. If your balance sheet isn't conservative enough, 80% of bad luck would have sunk you. The fortunate thing is this wasn't what happened to Keppel, since they didn't bet the house, what was at least what Mgt did correctly after looking at the odds.

[specuvestor]

I would think it is 80% skill 20% "luck" otherwise it wouldn't matter who is in charge executing for the company

Things change rapidly and it is up to the company and management to adapt or even exploit; that's why there's no fixed formulas. If conditions are static then AI would suffice

For example if Keppel doubled their their profits also means so are their competitors. The landscape will not be the same. In fact Samsung Electronics loves to do counter-cyclical capex investments to gain advantage. Private owned TSMC continued to focus on their expertise despite challenges from country sponsored CSM, SMIC and Global Foundries which threatened its lead. A decade later we see who executed well.

[weijian]

I would think it is 80% skill 20% "luck" otherwise it wouldn't matter who is in charge executing for the company

Things change rapidly and it is up to the company and management to adapt or even exploit; that's why there's no fixed formulas. If conditions are static then AI would suffice

For example if Keppel doubled their their profits also means so are their competitors. The landscape will not be the same. In fact Samsung Electronics loves to do counter-cyclical capex investments to gain advantage. Private owned TSMC continued to focus on their expertise despite challenges from country sponsored CSM, SMIC and Global Foundries which threatened its lead. A decade later we see who executed well.

I would like to believe the approximate number is probably somewhere in between our quoted extremes.

80% luck + 20% skill --> Under normal circumstances (40% lucky/40% unlucky), a skillful person would still have 20%+40% = 60% odds for them (he/she would succeed in 6 out of 10 alternate histories)

I am pretty pessimistic about such numbers as I suspect we only see the survivors (survivorship bias). There are probably tons of people who never realized their potential in life due to events beyond their control (eg. an illness, an accident, an economic crisis etc).

I also believe our luck can be self made - The thing that we choose to do (and become successful) is luck, but the fact that we are doing (and keep doing) something isn't. This brings me back to an old VB KopiKat's signature "Luck and opportunity awaits those who are ready and have the presence of mind to seize it when it arrives"...

[specuvestor]

yes I've seen many "lucky" people that seems to be in right place right time. But they must also have the capacity and track record to be chosen and able to be at that place at that time. Even the gift of gap which I'm biased against, is also a "skill"

I don't know anyone who will choose a stranger just randomly, except what is legally called "Acts of God" ie natural disaster or illness etc. I agree to be careful about survivialship bias... but that depends what you term as success. Time is the friend of the wonderful business but the enemy of the mediocre, and I tend to look at longer term aspects of success for execution, management vision etc which will smoothen out any "luck effect"

[BRT]

the to-and-fro about luck brought a number of old posts to mind. the first two from the late michael leong's old forum which is surprisingly still accessible and running. the third from a VC fund hiring i took note of as the consideration was overweight on process rather than results, which i found unconventional and refreshing.

1) "Just before saying that, he mentioned that he could have been made a bankrupt if not for the natural disaster that caused sugar prices to spike. I feel that at the end of the day, business luck accounts for a significant part of the success of any company. Some of my friends tried very very hard and yet they did not succeed. They are all smart people and they worked very hard. What was missing was business luck."
https://pertama.freeforums.net/thread/22...-subtitles

2) "To be successful in life, apart from the skills and determination, one also needs business luck and a blessing from above. But, we cannot just wait for this luck to arrive. We need to work extra hard until this luck arrives. Whether luck arrives on time or not, really depends on whether we have the blessing from above. "
https://pertama.freeforums.net/thread/10...extra-hard

3) "Nonetheless, they continued to grind it out, developing impressive new product distribution techniques along the way. Ultimately, the company did not succeed, but our admiration for Andrew grew. Successful startups are a combination of ingenuity, hard work, and luck. While Andrew had almost no luck, he had plenty of ingenuity and nobody worked harder."
https://a16z.com/2018/02/15/andrew-chen/

[¯|_(ツ)_/¯]

It's definitely luck in the first place.
Example, TanChinTuan indicated that 2/3 is of luck.

Stay safe and stay healthy, everyone.

[specuvestor]

If Nick Leeson was able to held on his position for 3 more months he would be a big winner and maybe into the annals of great traders instead of collapsing ING

So was it luck that killed him or risk management, positioning etc? Would he lost all if he didn't show hand in the first place? So actions come first (including gift of the gap etc) or luck comes first?

Kuok said he was overly bold and almost bankrupt. Decade later Coca Cola looked for him. lucky?

Sometimes one might not be the right person at the right time or circumstances due to one's expertise. It's that the skill set and roles are different. US corporations understood that well ahead and they often hire professional managers to manage companies rather than the innovators or entrepenuers. Asians on the other hand like to do everything. I would think the consequence has more to do with actions than luck.

[opmi]

One time success can be attributed to luck. Consistent success cannot be just luck. Should be structural or in the process.

Same thing for screw-ups. If somehow 'unlucky' things keeps happening to a person or company. Then cannot be just "suay". It has to do with the process/system already.