Yangzijiang Shipbuilding (Holdings) said 78%-owned Jiangsu Yangzijiang Offshore Engineering Co. has clinched its debut offshore oil and gas order.
JYOEC has entered into a construction contract with Explorer I Limited, which is wholly-owned by Mena Offshore Investments and managed by Offshore Logistics (Asia Pacific) (OLAP), to construct and deliver one unit of Letourneau Super 116E Class design self-elevating Mobile Offshore Jackup Drilling Rig worth US$170 million ($207 million).
This contract includes an option to construct one additional identical unit.
There are still many permutations to this. Project Delivery to me is a competitive advantage especially for a complex project like this.
People may pay a premium for complex design and good project management.
But at times, cost becomes a factor. I say the turning point for KepCorp and Semb Marine is when these China and Korean ship builders develop the expertise in these two areas. Then the margins will start to shrink.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.
Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
You can view Kyith's current portfolio here, which uses his Free Google Stock Portfolio Tracker.
His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.
You can read more about Kyith here.
- Golden Nuggets from JPMorgan Guide to Retirement 2024. - April 16, 2024
- Be Less Reliant on Banks and Build Stronger Capital Markets by Pushing for Better Shareholder Dividend and Buyback Yield - April 14, 2024
- The LionGlobal APAC Financials Dividend Plus ETF Won’t Give Singapore Investors 5% Dividend Yield Always. Further personal thoughts (with some data). - April 13, 2024
Aa
Wednesday 5th of December 2012
Drillships margin are getting squeezed due to competition and slower global growth
Keppel corp margins are highly reliant on oil prices and demand for oil rigs
Wheres SembMarine has a huge potential growth and higher margins from drillship, therefore SembMarine share price seems to be a higher valuation than Keppel Corp
f
Tuesday 4th of December 2012
Since bp case, Keppel and sembcorp marine have more orders on shallow water jackups than deepwater semi or drillships.
Only recently, deepwater starts to show signs of life.
Correct me if I am wrong.
Drizzt
Tuesday 4th of December 2012
hi f, i have not followed this so tight. uncle CW may track this much better than me.
Yeo Shan Rui
Tuesday 4th of December 2012
I think it is inevitable that the Chinese will move up the techonological ladder one day. In the shipbuilding industry, the Europeans which have been displaced by the Koreans and the Chinese are stuck with building cruise liner of which they still have some form of technological superiority.
Similarly, Keppel and Sembcorp are moving up to build drillship which the Chinese seemed to be far away from at the moment. However, it seemed to be a matter of time before the Chinese catches up (perhaps 10 years?). In any case, deepwater holds much more risk given that they are more sensitive to oil prices since deepwater has higher breakeven cost. Then again, it seemed hard for them to compete in field of lower technological competence given that they obviously do not have the cost advantage to fight.
Drizzt
Tuesday 4th of December 2012
the complexity and technology required for deep sea drilling can't be stolen or copied overnight, hence what you are paying for. another permutation is whether there is any way that there would be demand tapering off, but they built up a big order book.
Createwealth8888
Monday 3rd of December 2012
Do Kep Corp or Semb Marine compete in shallow water rigs?
Drizzt
Tuesday 4th of December 2012
nope