Singapore yards still facing stormy weather: KGI Fraser

Singapore

AN oversupply of rigs amid a prolonged oil slump could mean stormy seas for Singapore shipyards over the next two years, brokerage KGI Fraser said in a report on Monday as it initiated coverage on the sector with an 'underweight' rating.

KGI, formerly known as AmFraser, said that local rigbuilders face stiffer competition for limited orders and higher risks of order cancellations, and the rig oversupply situation is unlikely to improve anytime soon.

"We expect a tough year as yards fight for the limited orders and we are likely to see either of the two possible outcomes: lower margins or no order wins. That is on top of the increasing risks of order cancellations," analyst Joel Ng said, noting that shipbuilder Vard Holdings had on Saturday terminated contracts for two platform supply vessels a…