<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Keppel and SembMarine lose steam
</TR><!-- headline one : end --><TR>Credit fears and downgrades push shares to new lows </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lee Su Shyan, Assistant Money Editor
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->MARINE giants Keppel Corp and Sembcorp Marine (SembMarine) crashed to new lows yesterday on fears that the credit crunch is making it harder for their clients to raise cash to pay for oil rigs.
Keppel Corp ended down 68 cents or 8.8 per cent at $7.04 with 16.9 million shares traded. This is its lowest point since July 2006.
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</TD></TR></TBODY></TABLE>SembMarine lost 21 cents to $2.75 - a level it reached in May last year - on a volume of 14.3 million shares.
The falling oil price had already made investors wary of the two firms but now there are concerns the turmoil engulfing the financial institutions is making it harder for energy firms to borrow funds for new oil rigs.
It may force some to put their expansion plans on hold or worse, go to the wall. This occurred last week when a Keppel customer incorporated in Bermuda, MPF, which makes offshore oil rigs, sought bankruptcy protection from creditors citing project cost overruns.
Keppel shares have lost about 45 per cent of their value since the start of the year, with 14 per cent being wiped off just this week alone.
Market observers believe Keppel is not insulated from the impact of the spreading financial turmoil as all its different businesses are being affected to some extent.
A recent Credit Suisse report highlighted Keppel Land's exposure to the troubled Vietnam economy where it has nine residential developments and one township. Keppel Land shed about 11.5 per cent this week.
Any slowdown in the economy will surely affect Keppel Telecommunications & Transportation, itself the subject of a sell-down. Keppel T&T lost 28.5 per cent in this week alone, although this was partly the result of key shareholders Agus Anwar and Marcel Tjia facing forced selling over their shares.
Keppel's offshore and marine business, which brings in about half its profits, will certainly feel the pinch if its customers scale back expansion plans.
Kim Eng Research recently downgraded Keppel to a hold and cut its price target to $7.65, as the tightening credit market is expected to put the squeeze on the overall offshore and marine sector.
DMG & Partners also cut its ratings on Keppel to 'hold' from 'buy,' referring to similar concerns.
Similarly, SembMarine has lost nearly a third of its market value this year and has shed about 15 per cent in the last week.
DMG analyst Serene Lim put out a 'maintain buy' recommendation on SembMarine in mid-September, but she has become less positive since the financial turmoil over the past two weeks.
Market observers said that the counters were also hit by oil falling below US$93 a barrel on worries that any United States bailout package may not be enough to maintain demand levels for crude. [email protected]
</TR><!-- headline one : end --><TR>Credit fears and downgrades push shares to new lows </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lee Su Shyan, Assistant Money Editor
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->MARINE giants Keppel Corp and Sembcorp Marine (SembMarine) crashed to new lows yesterday on fears that the credit crunch is making it harder for their clients to raise cash to pay for oil rigs.
Keppel Corp ended down 68 cents or 8.8 per cent at $7.04 with 16.9 million shares traded. This is its lowest point since July 2006.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>SembMarine lost 21 cents to $2.75 - a level it reached in May last year - on a volume of 14.3 million shares.
The falling oil price had already made investors wary of the two firms but now there are concerns the turmoil engulfing the financial institutions is making it harder for energy firms to borrow funds for new oil rigs.
It may force some to put their expansion plans on hold or worse, go to the wall. This occurred last week when a Keppel customer incorporated in Bermuda, MPF, which makes offshore oil rigs, sought bankruptcy protection from creditors citing project cost overruns.
Keppel shares have lost about 45 per cent of their value since the start of the year, with 14 per cent being wiped off just this week alone.
Market observers believe Keppel is not insulated from the impact of the spreading financial turmoil as all its different businesses are being affected to some extent.
A recent Credit Suisse report highlighted Keppel Land's exposure to the troubled Vietnam economy where it has nine residential developments and one township. Keppel Land shed about 11.5 per cent this week.
Any slowdown in the economy will surely affect Keppel Telecommunications & Transportation, itself the subject of a sell-down. Keppel T&T lost 28.5 per cent in this week alone, although this was partly the result of key shareholders Agus Anwar and Marcel Tjia facing forced selling over their shares.
Keppel's offshore and marine business, which brings in about half its profits, will certainly feel the pinch if its customers scale back expansion plans.
Kim Eng Research recently downgraded Keppel to a hold and cut its price target to $7.65, as the tightening credit market is expected to put the squeeze on the overall offshore and marine sector.
DMG & Partners also cut its ratings on Keppel to 'hold' from 'buy,' referring to similar concerns.
Similarly, SembMarine has lost nearly a third of its market value this year and has shed about 15 per cent in the last week.
DMG analyst Serene Lim put out a 'maintain buy' recommendation on SembMarine in mid-September, but she has become less positive since the financial turmoil over the past two weeks.
Market observers said that the counters were also hit by oil falling below US$93 a barrel on worries that any United States bailout package may not be enough to maintain demand levels for crude. [email protected]
