Is O&M still relevant to Keppel Corp's new vision?

"DON'T put all your eggs in one basket!" so says the oldest rule in the financial book. But if the experiences of Singapore's two largest offshore and marine (O&M)-related counters are anything to go by, this can be easier said than done in the corporate world.

From the get-go, the baseline differs between the two - one equity analyst rightly points out that Sembcorp Marine as a "pure" O&M play has less room for diversification in what has been dubbed the worst-ever sectoral downturn, quite unlike the case for multi-business conglomerate Keppel Corporation.

Observers have thus far noted a divergence in paths taken by the two groups since the 2014 oil price crash. Without a doubt, contracting activity in the upstream oil and gas segment that once answered for the bulk of SembMarine and Keppel's order book is still far off from pre-crash levels. But that did not deter SembMarine from chalking up new orders at the expense of its rivals in Singapore and the Far East. Yet, industry watchers have warned, this may come at a great cost to the yard group's margins as it has had to low-ball its bids to land some of these contracts.