Keppel O&M and SembMarine would do well to merge: DBS report
The companies are barely profitable at current activity level despite being cost efficient, say analysts
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Singapore
WITH orders at a trough and expectations for only a modest recovery, a merger of Singapore's two major rigbuilders could create a global giant that is more competitive and resilient, DBS analysts wrote in a report this week.
"Keppel Offshore and Marine (O&M) and Sembcorp Marine are barely profitable at the current activity level (down 50 to 60 per cent from peak) despite being one of the more cost efficient shipyards, and with all the cost reduction measures in place," DBS analysts Ho Pei Hwa and Janice Chua wrote. "Hence, it seems logical consolidation of the two Singapore rigbuilders will further increase competitive strength to lead on a global basis."
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