Keppel Corporation (SGX: BN4) shares are down 3% today. There’s no specific news driving BN4 shares down, this is part of a general decline in recent days. A continuation of a trend that is. This is despite some recent successes at the company - launching a new fund and so on. The general market view is just, well, so what? And so a general lack of interest.
The business line: “Keppel Corporation Limited, an investment holding company, engages in the energy and environment, urban development, connectivity, and asset management businesses in Singapore, China, Hong Kong, Brazil, other far East and ASEAN countries, and internationally. It constructs, fabricates, and repairs offshore production facilities and drilling rigs, power barges, specialized vessels, and other offshore production facilities; engineers, constructs, and fabricates platforms for the oil and gas sector; undertakes shipyard works and other general business activities;”
There have been recent successes: “Keppel Corporation’s flagship open-ended infrastructure fund, Keppel Core Infrastructure Fund (KCIF), achieved its first close with initial capital and co-investment commitments of US$575 million (S$786.4 million).” If you’re running a fund manager then gaining funds to manage is a success.
Keppel Corp share price from Google Finance
But the other business lines look less appealing. Property and China doesn’t look, shall we say politely, interesting just at present. Or perhaps too interesting in fact. Maine and shipping, well, we’ve two other Singapore quoted companies to think about there. YZJ Shipbuilding is China based and SGX quoted. Seatrium is Singapore based. Neither of them are exactly getting the market’s juices going.
The reason why is fairly obvious too. While it’s true that there’s much more offshore work going on - renewables as well as oil and gas - there’s also intense competition in the sector. Capacity is rather larger than demand that is therefore profits are hard to come by.
Thus the share prices in the sector are, at best, going sideways or, as with Keppel, gently declining. Until there’s some major news we’d expect this to continue.
