Is the Brazil bubble bursting and bringing Keppel and Sembcorp along?

There is plenty of bad news coming out of Brazil and this will impact Singapore's rigbuilders Keppel Corp and Sembcorp Marine. The national oil company Petrobras is being caught in an ongoing corruption probe that has seen its CEO resign and international suppliers such as Keppel and Sembcorp implicated. Sete Brasil, formed by a group of Brazilian companies to run the offshore rigs working in Brasil has difficulty obtaining financing. As a result, Sembcorp and other rig and shipbuilders have not received payment. 

If Petrobras and Sete Brasil do not sort their issues out in time, it will mean earnings downgrade for the two Singapore stock exchange heavyweights. Sembcorp is much more exposed to the rumble in the Brazilian jungle. Half its net order book comprises drillships ordered by Sete Brasil. Both Singapore rigbuilders have also invested in setting up a yard in Brazil to meet the country's local content requirement.

Keppel Corp trade settled and sold

To settle my Keppel Corp trade, I had so seek help from my friends and fortunately I have some good ones. Some things happened in my family and I was only able to sell the 3 lots today at SGD 8.36, netting me about SGD 611 or 2.5% return on the capital outlay. On hindsight, it was a lot of asking of favours for a paltry return (percentage wise). I guess the best advice I can give at this point is to trade in money you have and can lose. 

Living on the edge with Keppel Corp contra trade

Bought three lots of Keppel Corp late on Tuesday hoping to catch any upside it has, after it releases its results today. Little would I know that on Wednesday, Keppel Corp along with Keppel Land would request for a trading halt. There are rumours that Keppel Corp will take Keppel Land private. Depending on how the acquisition is carried out - cash, shares or hybrid -  the privatisation will benefit the price of Keppel Land and not Keppel Corp's shares. More importantly, tomorrow will be the last day I can hold on to the shares without settling (T+3). I have thus put myself in a gambling position as I have no intention of settling. Hopefully, things go in my favour this time.

Keppel on track to deliver P-56 to Petrobras

Singapore, 5 June 2011 – The consortium of Keppel Offshore & Marine Ltd (Keppel O&M) and Technip Engenharia S/A is on track to deliver the P-56 Floating Production Unit (FPU) to Petrobras Netherlands BV (PNBV), safely, on time and within budget. The first FPU completely built in Brazil, P-56 achieved 9 million man-hours without lost time incidents. With a displacement of 50,000 tonnes, this massive FPU, one of the world’s largest, measures 110 metres in length and width, and 125 metres in height. Brazilian President HE Dilma Rouseff witnessed the christening of P-56 by congresswoman Luiza Erundina at Keppel FELS Brasil’s BrasFELS shipyard in Angra dos Reis. Also present were the Governor of Rio de Janeiro, Mr Sergio Cabral, Petrobras’ President Mr Jose Sergio Gabrielli, Keppel’s management and over 8,000 Brazilian shipyard workers. Mr Choo Chiau Beng, Chairman of Keppel O&M and non-resident Ambassador of Singapore to Brazil said, “P-56 is a shining example of the technology expertise and execution capabilities built up by BrasFELS and Brazil’s offshore and marine industry.

Kenneth Fisher recommends buying Keppel Corp

You have to read it here to see it. This is quite a first for me, seeing a foreign columnist recommending Singapore stocks.

Show me where the money will go, not where it has gone

The following is an abridged version of what Teh Hooi Ling wrote on her "show me the money" column. I have read her earlier article on the use of the Piotroski F-score and I think that beginners who can try to come up with such a scoring matrix, will make a positive step in improving their investing process.

Most of the companies that she has listed out as a result of using the F-score, are all very big companies. This will end up neglecting to include small cap stocks that have the potential for supernormal returns, volatility notwithstanding. That said, it is possible while during portfolio construction to use a separate screen altogether when allocating money for small caps. To be sure, Teh has written on how to select small cap stocks before.

In search of good long candidates (Link here)