Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Thursday, 28 January 2016

A new year; fresh pessimism?

As we are almost done with the first month of the new year, there seems to be more pessimisms lurking in the market, especially locally. Stock markets are tumbling lower, where the STI has dropped an estimated of 9%. The local property market is not doing well either. To add on, recently there were news of retrenchments that will be done in the local jobs market. Is just me or it seems that 2016 doesn't feel like a good year?

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The earlier crash of oil prices to new yearly-lows has negatively affected numerous local sectors, especially the oil rig industry. Although being one of the world-best oil rig builders, this has not defended KepCorp and SembCorp from the industry-wide trend. Posting of falling profits and announcements of major restructuring, it seems that the management is doing its best to tide against this resultant crisis.

I believe that KepCorp will soon be in good valuation and presents a good buying opportunity. With the lower pricing, M&A seems to be ripe, evident from the recent rumours of Semb Mar's news.

Furthermore, following the plunge of oil prices and predicted continuation of this trend, the management appears to be reacting to it. Numerous action plans were announced to withstand pressures and having an existing strong financial balance sheet will definitely aid it in this "crisis". The major shareholder, Temasek, is also actively monitoring the situation.

Last but not least, being one of the world's largest oil rig builders, the performance of KepCorp can act as a proxy to the performance of the industry, though limited. It can also be a bet in the entire industry, in my opinion.

While the news this year is not limited to just KepCorp and Semb Mar, numerous counters are priced at lower prices and may present a good buying opportunity for all.

Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?

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  1. Interesting take on Keppel and SMM ;)

    1. Thanks! Seems like now it might be looking to sell its non-core assets to tide over the crisis.