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Could Keppel Corporation Limited Be A Value Oil Rig & Shipbuilding Stock?

Keppel logoSingapore is home to one of the world’s five busiest ports and is, perhaps unsurprisingly, also a major hub for ship-repair services.

Singapore can also proudly claim to be the world’s largest oil-rig producer and one of the top three oil-refining centres.

The Singapore Stock Exchange plays hosts to 14 Oil Rig and Shipbuilders. The largest of these is Keppel Corporation Limited (SGX: BN4), with a market value of around S$20 billion.

With an earnings multiple of 10.5 and a dividend yield of 3.7%, Keppel does not represent bad value. But with a value that is twice the book value, investors could be better off looking elsewhere.

Several companies elsewhere in the shipbuilding industry may prove more attractive.

Yangzijiang Shipbuilding (SGX: BS6) is based in China. The company, which recently announced record second-quarter net income, trades at below six times earnings. It has a dividend yield of 4.4%. However, it does trade at a 10% premium to its book value.

ASL Marine Holdings (SGX: A04) trades at just under seven times earnings, or half the market average. Its dividend yield is slightly lower than Yangzijiang Shipbuilding’s yield of 3%. The company’s price-to-book ratio of 0.7 could be more appealing to value investors, too. However given that the company has recently issued a profit warning, some investors might want a greater discount to book.

Finally, ES Group Holdings (SGX: 5RC) is the minnow amongst the shipbuilders. It has a market value of S$17 million. With a price-to-earnings ratio of 8.5, a dividend yield of just over 2% and trading at half its book value, ES Group Holdings could be good value. However, it could be instructive to bear in mind that profits at ES Group have fallen in recent years due mainly to rising costs.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.