Broker speculating on another big TLC merger

Following Temasek’s recent $6 billion divestment of Ascendas/Singbridge to CapitaLand, CGS-CIMB sees benefits in streamlining the yards and conglomerate structures of Sembcorp (SCI), SembMaritime (SMM) and Keppel (KEP).

“If the rig building industry does not recover in the next three years, we think the consolidation of both SMM and KEP O&M could strengthen Singapore in the large-scale FLNG (KEP) and FPSO (SMM) newbuild segment as well as create an O&M design and engineering powerhouse, competing head-on with the Koreans.”

‘A possible structure is one mega yard (SMM + KEP O&M), one renewables/utility group Sembcorp Industries (SCI) and one urbanisation/infrastructure group (KEP).”

It thinks Sembcorp could be the long-term winner as a pure renewable energy/utility group focusing on overseas M&A to grow its capacity, commanding higher valuations. Brokers forever flogging this dog.

Meanwhile, it thinks, Keppel could continue to pursue its urbanisation solutions of property and infrastructure development, backed by asset management capital.

The total book value of SembMaritime and Keppel O&M amount to S$5.3 billion. The hypothetical shareholding structure of the enlarged yard could be in the form of a JV, with Temasek having a majority control stake, the broker says.

CGS-CIMB has Keppel, Sembcorp and SembMarine at “add” with target prices of S$8.41, S$3.49 and S$2.46 respectively.

I’m happy with the present Keppel set-up as there’s no guarantee that it’s O&M managers will run the joint show. SembMarine’s O&M managers are second rate by Keppel’s standards.

 

Cynical Investor

Cynical Investor blogs at Thoughts of a Cynical Investor

 

 

 

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9 Responses to “Broker speculating on another big TLC merger”

  • MarBowling:

    What a blady name…SinKBridge…gone case!

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  • LIONS:

    This MERGER has been targetted for years.
    So,Sembcorp will lead Keppel at the end.
    LPPL is the outcome.

    Scholars blur like sotong.
    Only want top $$$ for easy peasy kind of work.

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  • patriot of TUMASIK:

    CI turn PUNDIT??? such news can be found on business publications with TRU PUNDITS, not Fakeys passing off as one like CI, nothing left to talk meh??? talk to yourself facing the Mirror and see the IDIOT looking back at you

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  • HarderTruths:

    Does not matter whether they are different or the same company – just semantics. The money is going into the same pockets.

    Ownself buy ownself.

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  • "0 + 0 = 0":

    What is the point of the merging two “dinosaurs?

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  • Bapak:

    So that when they sell it can fetch higher value. They need money.

    "0 + 0 = 0":
    What is the point of the merging two “dinosaurs?

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  • rukidding:

    Well,…the dafts will continue to vote for them and in the end “got caught and trapped again”…..because their “see pee f* $$$ ” will be “used again” for their own benefits ???

    Others People’s Money ???? OPM $$$ ???

    Good luck to those dafts !

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  • oxygen:

    RIG BUILDING HAS ALWAYS BEEN A FEAST-AND-FAMINE business – the famine, of course, are a lot longer of lasting than the sumptuous feast.

    :“If the rig building industry does not recover in the next three years, we think the consolidation of both SMM and KEP O&M could strengthen Singapore in the large-scale FLNG (KEP) and FPSO (SMM) newbuild segment as well as create an O&M design and engineering powerhouse, competing head-on with the Koreans

    It is NOT about recovery in the next three years nor is it about Korean competition. Here is the reason.

    Up to 340 offshore drilling rigs could be scrapped by 2020

    https://www.bassoe.no/up-to-340-offshore-drilling-rigs-could-be-scrapped-by-2020/news/53/

    The burial of outdated surplus rigs takes a lot longer for its owners than anticipated of logistics and the dearth of resuscitation demand for drilling platforms. Offshore oil exploration are very expensive high risks undertakings and current oil price of US$53 per barrel of WTI Intermediate simply does not justify order of rehabilitation of even the most recent abandoned rigs, let alone the order of newer technology platform far more expensive.

    THERE WON’T BE A RECOVERY OF OIL RIG BUSINESS for another 6 years is my guess – AND ONLY IF OIL PRICE SURGES PAST us$90 PER BARREL AND SUSTAINING OF THAT FOR A FEW YEARS AT LEAST.

    I am not seeing this happening of even remote chances. Shale oil and gas is undermining even OPEC price sustain hopes. The Koreans rig builders are in similar dire straits too.

    THE SPECULATIVE HUNCH OF MERGER talk is just a possibility of streamlining costs to sustain survival chances.

    IF THE MERGER COMES THROUGH, the merged entity won’t be keeping the same costs structure of a combined entity.

    THERE WILL BE MASSIVE RETRENCHMENT for those employed in both entity. So this blogger thought is not entirely misplaced of his/her conjecture.

    "0 + 0 = 0": What is the point of the merging two “dinosaurs?

    The US-China trade tension is far from resolution according to Bloomberg sources. Trump said he won’t meet Xi JinPing before the 1 March 2019 deadline for a trade deal. Braced for a full-scale trade/tariff war from that self-proclaimed ” I am a tariff man”

    Yet another dampener of our property market. Even Lawrence Wong says that sales of balance of unwanted flat is no longer a balloting queue. IT IS “LELONG market” for any buyer coming forward.

    Our economy is THOROUGHLY FIACK.

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  • Aziz Kassim:

    Don’t waste, they are going to sink as heavy with debts!

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