CIMB has hit out at Singaporean yards building too many speculative rigs, comparing them to casinos. The bank maintains an overweight caution on most locally listed yards.
“Reflecting the global financial market trend, speculative rig-building is seeing a shift from the Norwegian market to Singapore, which currently has 13 units of rigs ordered or 15% of the newbuild market share,” CIMB noted.
Of the 90 units of jack-up rigs being built currently, CIMB reckons 25% are speculative – of which 15% are being ordered by Singapore-incorporated companies, 7% by Luxembourg-based Prospector Offshore and 3% by private equity firm, Landmark Drilling.
“These speculators are likely to flip the assets and make some quick handsome profits, catalysing their share prices in the process. Favourable financing from the Chinese yards could also minimise risks for these speculators, some with zero capital outlay,” CIMB said.