Punting on O&M recovery is foolhardy before solid research

MOST offshore and marine (O&M)-related counters took a beating along with a broad-market slide the first half of last week before some counters clawed back losses over the weekend.

Amid the stock market jitters, brokers contacted by The Business Times have maintained their buy calls for the sector, particularly for the two large caps, Keppel Corp and Sembcorp Marine. Most consider the recent slide was part of a broad-market correction. Noting how broker reports have turned bullish particularly on the outlook for Keppel Corp and SembMarine, one remisier views the surge leading up from late last year as a sign of "sentiments moving six to nine months ahead of an expected improvement in fundamentals".

So despite Keppel Corp's first-ever quarterly loss at the start of this earnings season, CIMB is "hopeful of happy days ahead"; Credit Suisse calls on investors to "get on the boat"; and DBS Vickers says "the rally has legs... with new orders driving re-rating". Small- to mid-cap O&M counters that have cleaned up their balance sheets have also scored significant advances. In an online forum, one retail investor raved about Dyna-mac's recent "rocket rally".