Seeking Alpha: Keppel Hoping A Different Structure Can Produce Better Results

These are challenging times for Keppel Corp (OTCPK:KPELY). As one of the largest builders of offshore drilling rigs, Keppel is looking at an increasingly tough operating environment as low oil prices have pushed down rig utilization and dayrates, stressing already highly leveraged drillers and leading to delivery delays and cancellations. With that, the company's ADRs have fallen by more than a quarter since my last update.

Keppel is looking at a pretty solid order book that will keep its yards busy for the next two years, but there are serious questions about what happens after that. Unless oil prices turns up sharply this year (and look likely to stay there), it's hard to see where the replacement orders are going to come from. That makes management's decision to acquire all of Keppel Land even more significant to the long-term story, as property development may be the company's only viable option for growth after the offshore order book dries up. While Keppel does still pay a solid dividend and appears to be undervalued by a double-digit percentage, the significant operating uncertainties make it difficult to argue for buying these shares.

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Keppel Hoping A Different Structure Can Produce Better Results

Investopedia: Ship Finance Has The Hatches Battened Down

Shipping is still a mess. Tanker rates have picked up a little bit and dry bulk rates seem to have at least leveled off, but overall rates are still not very good. That presents a fairly uninspiring backdrop for Ship Finance (NYSE:SFL), one of the world's largest tanker fleet owners. Although Ship Finance seems built to last, investors may wonder if the risk of further worsening conditions and/or a dividend cut is worth the potential of a sector recovery and the above-average dividend yield.


Restructured Deal with Frontline was a Must
Ship Finance does not operate the ships it owns, instead it charters them out to operators on long-term contracts. Unfortunately, a very large percentage of the firm's ships (and nearly all of its oil tankers) are chartered to Frontline (NYSE:FRO), the recently-struggling shipping firm controlled by John Fredriksen. For related reading, see Play the Bottom in Shipping.


Read the full piece here:
http://stocks.investopedia.com/stock-analysis/2012/Ship-Finance-Has-The-Hatches-Battened-Down-SFL-FRO-SDRL-CMRE-TEU0316.aspx

Investopedia: 2011 In Review - Shipping Hit The Iceberg

What more is there to say about the state of the shipping industry for 2011 beyond words like "yuck," "blech", and "please make it stop"? Rates for all manner of ships plunged throughout the year, sometimes sinking below the daily operating costs of even the efficient operators. Clearly, an industry in which companies can't even charge enough to pay their operating costs is one that's in difficult shape, so the stock market carnage seen in this sector during the year is not exactly surprising.


Shipping was not actually the worst-performing sector this year (thanks solar, coal and banks), but a worse-than 20% drop for the sector is certainly bad enough. (For related reading, see Warning Signs Of A Company In Trouble.)

Yes Virginia, There Were Some Winners
Against a terrible backdrop, there actually were some notable winners this year - proof positive yet again that a lotus can still bloom in even the funkiest pit.


Please click the link for more:
http://stocks.investopedia.com/stock-analysis/2011/2011-In-Review--Shipping-Hit-The-Iceberg-GLNG-KEX-FRO-DRYS-TK-DSX-SSW1215.aspx

Investopedia: Frontline Lives On, But At What Cost?

There was no question that the company had to do something, but Frontline (NYSE:FRO) has taken a pretty interesting path in its restructuring. Although the chances of Frontline going out of business due to liquidity pressures are now much lower, it is an open question as to how upside remains left with the publicly-traded remainder and who really benefits the most from this somewhat convoluted transaction. (For related reading, check out Understanding Financial Liquidity.)

 

From One to Two  

Frontline was founded in the mid-1980s by John Fredriksen in response to a terrible market for oil tankers. Yet another terrible tanker market, a market wherein rates have frequently been at or below cash operating costs, will now fundamentally change this company going forward.

To read the full article, please click this link:
http://stocks.investopedia.com/stock-analysis/2011/Frontline-Lives-On-But-At-What-Cost-FRO-SFL-NAT-DSX1207.aspx