Singapore rigbuilder shares set to Outperform near-term: JPMorgan

Shares of Singapore’s rigbuilders are likely to stick to the “buy in January, sell in April” trend for a fourth year in a row, JPMorgan says, noting for the past three years, the stocks consistently outperformed the STI in the first 3-4 months of the year before consolidating as the market awaited potential catalysts from orders, earnings and Petrobras success.

“With the recent 12%-18% stock correction, we believe we are likely to see offshore outperform into early 2013,” the house says, citing offshore orders’ continued strong macro outlook. Margin concerns are likely to recede, it says, expecting strong 4Q12 margin and a steady 2013 performance. It expects 30-35 deepwater rigs will be ordered over the next 12 months, with 30%-35% being semi-subs, with additional orders likely from Brazil for drillships and FPSO.

But it remains “more conservative” on jack-up orders, seeing a potential market-share loss for Singapore players. JPMorgan’s key concern remains the Korean yards as they are getting more aggressive in products and pricing. It rates both Keppel and SembMarine at Overweight, with $13.30 and $5.40 targets respectively.

Keppel is up 3% to $10.58 while SembMarine is up 3.1% to $4.38.