Being a fundamentalist, it is intriguing to read the technical analysis done by Dave, founder of See How I Trade. For the next few series of articles, I will attempt to combine both my bottom-up approach with Dave’s top down market analysis on SGX stocks. In this article, I will touch on Keppel Corporation, one of the most favourite blue chips among Singapore investors.
The past one year has been extremely unkind to Keppel Corporation, which suffered a triple whammy from the Lava Jato scandal, potential Sete Brasil bankruptcy protection and plunging crude oil prices. Due to this challenging environment, Keppel Corporation’s share price plunged to a 6 year low of $4.84 per share. Investors of Keppel Corporation were shell-shocked by the extent of the fall as in the year 2014, the share price was still trading at the $10 range. To drop by 50% in value within a year is frightening, even in terms of paper loss.
Many long-term investors of Keppel Corporation put on a brave front and one finance blogger even insisted that Keppel Corporation is not a pure oil and gas play. Of course everybody knows that Keppel Corporation is a conglomerate with diversified business in property, infrastructure and investments segments. But it is important to be objective and not be blinded by emotions. The matter of fact is that Keppel Corporation’s core competence is still in offshore and marine business. In fact, Keppel O&M has contributed S$481 million or one-third of the Group’s income for the year 2015. So to downplay the impact of the oil crisis on the company would be a mistake for Keppel investors.
Based on the recent financial results, performance of Keppel is mixed at best. Cash flow for the full year is horrible, at negative $705 million. The negative cash flow was due to the decrease in operating profit in 2015, thus reflecting the challenging environment Keppel is operating in. However, balance sheet is still healthy with net current assets of $6.67 billion. The company has sufficient cash to meet short-term debt obligations and with measures to reduce exposure in bad debts, Keppel should be able to ride out this sluggish oil demand. Of interest to note is that for the first time in many years, Keppel is trading below its net tangible asset of $6.07.
So its Keppel a value buy or value trap? Many investors are pondering whether to buy Keppel at this juncture but then again, the market outlook plays an important factor in determining the right entry-level for this stock. Even though Keppel management insists that the current low oil prices are not sustainable in the long run, it is a big question mark when we will see days of high oil prices again. Keppel being a world leader in oil rig building, will of course be directly impacted by the oil price movements. In this regard, investors can draw reference from Dave’s See How I Trade and gather insights of Big Boys’ movements and his technical analysis for the oil market. Is crude oil heading for a short-term downtrend? Are the Big Boys targeting Keppel?
See How I Trade is a membership website for investors keen to learn how to trade the stock market. From there, you can understand the market trend and learn where the market is heading. Join Dave in learning the various ways of making money from the stock market. Watch how the guru strategize and learn from him on how to trade. This blogger has a passion in trading and like me, understood the importance of respecting the big boys’ movement. Some features of his membership website:
1)My Daily Potential Trades
2)My Daily Trend Analysis
3)My Spotting of Big Boy’s Movement – Unique and Powerful!!
4)My Weekly Trend Analysis
5)My Weekly Dow Component Analysis
6)My Recent Trade Summary
7)Strategies to use in different situations
8)Entries, Stop Loss and Targets
9)Exclusive Articles of unique movements
10)Wealth eBooks specially written for VIP Traders
The unique portion of his site is that he combines Technical Analysis (on charts) and the movement of the Big Boys (as seen in the derivatives market) to form powerful trades. I was inspired by Dave and realize the importance of learning and earning. So if you are interested to learn how to trade, I encourage readers to subscribe to his membership site as VIP Trader. Remember to quote the discount code: “sgwealthbuilder” to enjoy discounted subscription of USD49 per month.
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