Keppel Corporation Limited vs. Sembcorp Industries Limited: The Oil & Gas Conglomerate With The Lower Valuation

Over the past 12 months, oil & gas companies in Singapore’s stock market have seen their share prices plunge.

Because of the fall in the price of oil since 2014 (oil is less than US$50 per barrel today, a far cry from the price of more than US$100 per barrel seen in mid-2014), many of the oil & gas industry’s players have faced massive challenges in their businesses.

In Singapore’s stock market, two of the most prominent oil & gas companies would be Sembcorp Industries Limited (SGX: U96) and Keppel Corporation Limited (SGX: BN4). The duo have multi-billion dollar market capitalisations and are a part of the Straits Times Index (SGX: ^STI), Singapore’s most prominent market benchmark.

In 2015, the marine engineering arm of Sembcorp Industries, which builds oil rigs, made up the majority of its revenue. The same goes for Keppel Corporation. In fact, the marine engineering arms of both companies are considered to be some of the world’s largest oil rig builders.

I thought it’d be interesting to see which of the two have the lower valuations in terms of the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.

Here’s how Sembcorp Industries and Keppel Corp stack up:

Sembcorp Industries and Keppel Corp valuation table
Source: S&P Global Market Intelligence

What we can see from the table above is that Keppel Corp is the company with the higher dividend yield and lower PB and PE ratios.

It should be noted that the above exercise, while useful for investors, should only be seen as a starting point for further research on both Sembcorp Industries and Keppel Corp.

There are many other things about a company that investors need to consider beyond the three value ratios. This is especially important since the ratios are based on past information whereas a company’s future stock performance will have dependence on its future business performance.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.