DBSV maintain our technical views for O&M stocks Keppel Corp, SembCorp Marine and Ezra to find interest. The price of Brent
Crude remained supported around USD69-70pbl. We had highlighted in our Weekly Comments that the preferred entry
levels for the 3 stocks are:
1) Keppel Corp – Buy at $8.30, sell at $9.45
2) SembCorp Marine – Buy at $3.60, sell at $4.15
and 3) Ezra – Buy at $1.63, sell at $2.
We maintain our view for these stocks.
Keppel Corp has fallen to within 10cts, SembCorp Marine within 5cts and Ezra has reached our preferred entry levels.
We believe that they are poised for a rebound. Even Ezion, which we highlighted as having downside risk to $0.55 also reached that level yesterday. Possible catalysts for Keppel Corp and SembCorp Marine ahead are the potential awards of the first 2 deep-water rigs contracts by Petrobas as the award of the 28 rigs building programme has started. This is Phase 1and the tender for these contracts should close by today. Phase 2 in the future could award up to 21 rigs and phase 3, 5 rigs.
Ezra is simply oversold based on 14-day and 8-wk RSI as well as weekly stochastics reading. The stock has also fallen 38% below only fundamental fair value of $2.62 and there is scope for a technical rebound from here.
The MSCI semi annual rebalancing will occur today on the close. For the Singapore market, Keppel Land will be included in the MSCI Singapore index. Stock is likely to rise in the current session.
DBS Research currently has a Buy recommendation for Keppel Land with TP of $4.13.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework. ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com
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