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Is Time Running Out For Keppel And Sembcorp Marine As Oil Collapses Below Zero? [Guest Post]

Is Time Running Out For Keppel And Sembcorp Marine As Oil Collapses Below Zero? [Guest Post]

This week saw an unprecedented drop in oil prices to a negative level, almost -$40/barrel to be exact. Such a phenomenon has not happened in the past and it was largely the result of paper traders and Oil ETFs dumping their expiring May contracts “by all means” as buyers disappear.

This post was originally posted here. The writer, Royston Tan is a veteran community member and blogger on InvestingNote, with username known as Royston_Tan.

Since then, WTI oil prices have recovered to roughly $17/barrel as of this writing, a positive figure but not a “champagne popping” price level.

IS TIME RUNNING OUT FOR KEPPEL CORP AND SEMBCORP MARINE?

Keppel Corp posts 40% drop in 1Q earnings to $203 mil on lower one ...

The significant collapse of oil prices does not bode well for both Keppel and Sembcorp Marine. Yes, they do not derive their revenue directly from the sale of oil but indirectly in the form of newbuild contracts for production/drilling-related assets.

The problem is that with oil prices that low amid an oil glut scenario, no oil company in their right frame of mind will be contracting large newbuild orders from yards in the near term, in my view.

Can the existing backlog of Keppel and Sembcorp Marine support revenue recognition?

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How to Capitalise on the recent Keppel Corp News

How to Capitalise on the recent Keppel Corp News

Last week, the major news was Temasek’s plan to offer Keppel shareholders $7.35 per share, in cash, to buy 554.9 million shares or 30.55% of Keppel.

 

Related imageImage result for keppel corp

This partial offer will raise its stake in Keppel from the current 20.45% to 51%.

Temasek will be doing this through its wholly owned subsidiary Kyanite Investment Holdings.

Prior to this news which was released on 22 October Tuesday, Keppel’s shares were halted on 21 October Monday.

When the trading halt was lifted on Tuesday, after the news was announced, Keppel’s stock soared more than 10%.

If you’d bought the Keppel Corp Long DLC on 22 October – it gave a 70% in just one day!

However, this is where it gets interesting – even if you got in late, by buying the 5x Long DLC on 22 October AFTER the news and the stock shooting up, the DLC still could have made you more than 20% within a few days.

This is the magnitude of serious returns we’re talking about.

So what’s this all mean for retail investors?

A Daily Leverage Certificate (DLC) is a type of leveraged product listed on the SGX which allows you to get leveraged return of an underlying single stock or index. The leverage is fixed every day, e.g. for a 5x Long DLC, every 1% movement in the mother share will lead to 5% movement in the LongDLC price.

So whenever you see a short-term trading opportunity, e.g. stock about to break out, index reaching support level etc., you can use DLC as a tool to get leveraged return. This recent scenario of Keppel exemplifies this perfectly.

4 key reasons why you should use DLCs:

  1. Simple trading instrument to get leveraged return of popular stocks and indices from Singapore and Hong Kong
  2. No account opening process required; trade it like a stock – simply go to your stock broker account to trade DLCs (subject to SIP qualification)
  3. LongDLC and ShortDLC – two types of DLCs allow you to gain from both ups and downs of the Underlying stock or index
  4. Lower barrier of entry – one lot of DLC is 100 shares, and the unit price is usually much cheaper than the mother share, allowing lower barrier of entry and more flexible allocation of your investment capital

Here’s the full list of DLC & the corresponding underlying securities every investor and trader needs to know: https://dlc.socgen.com/en/product/search

Our ongoing simulation competition for you to experience trading DLC with up to $15,000 worth of prizes for grab: http://bit.ly/SGATT2019

Where to trade DLCs for real?

Find your preferred broker below:

 

There’s also a free Technical Analysis workshop upcoming on Saturday, 2 Nov. Find out more here: http://blog.investingnote.com/multiple-time-frame-analysis-mtfa/


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This Keppel KBS US REIT Rights Issue and Withholding Tax Debacle (Guest Post)

This Keppel KBS US REIT Rights Issue and Withholding Tax Debacle (Guest Post)

This post, This Keppel KBS US REIT Rights Issue and Withholding Tax Debacle was originally posted here. The writer is a veteran community member on InvestingNote, with username known as Kyith.

kbs

One of the most traumatizing experience for shareholders of Keppel KBS REIT was the announcement of the acquisition of Westpark Portfolio in Redmond.

Keppel KBS is a Singapore listed real estate investment trust (REIT) which owns 11 office assets in 7 key regional markets in the USA.

Westpark is a portfolio of 21 buildings located in the Redmond area, most famous for being where the original Microsoft resides. Keppel KBS proposed to acquire this portfolio for US$170 mil.

By all accounts for their first acquisition, things should not be so traumatizing. I am not sure if its due to the rather negative overall market sentiments or what but the share price of Keppel KBS have fell 23% since the announcement of the acquisition.

At one point it was 3 cents away from the price the rights was priced at (US$0.50).

I think analysts and bloggers have written enough about it. What I would like to do is to gather some personal notes on what transpired so as for me to revisit next time.

Attractive Dividend Yield Even Before the Acquisition

The chart above shows the timeline of all the events that happen till now (the rights issue have not been concluded yet)

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