The Upstream Oil & Gas Companies on SGX

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The Oil & Gas names typically associated with the Singapore Oil & Gas sector are Keppel Corp (BN4), Sembcorp Marine (S51), Sembcorp Industries (U96), Ezion Holdings (5ME) and STX OSV Holdings (MS7). These are the five biggest Oil & Gas stocks listed on Singapore exchange (SGX). Price performances of these five stocks, which all provide oil equipment and services, have varied over the past 12 months from +5.5% for STX OSV to +166.0% for Ezion.
 
SGX also lists five companies involved in the exploration of oil and gas.  
 
Four of these explorers are listed on the Mainboard while one explorer is listed on Catalist.  Oil and gas explorers represent the upstream side of the industry with oil or gas reserves making up their primary assets. A core feature of oil and gas reserves as an asset base is that assets deplete and must be continually replaced through either drilling activities or acquisitions.
 
The five oil & gas exploration & production companies listed on SGX are as follows:
 

  • Interra Resources (5GI), which is involved in exploration, field development and production of oil. Its portfolio of assets is made up of five contract areas in Indonesia and Myanmar. Last week Interra Resources transferred from Catalist to the Mainboard as discussed in this recent Market Update. Interra Resources has gained 279.1% over the past 12 months.  Current full market capitalisation is S$197 million. The investor relation website can be found here.
  • Loyz Energy (594) is involved in exploration and development. Its portfolio made up of assets in India, the United States and Australia and New Zealand. Loyz Energy is listed on Catalist with a full market capitalisation of S$132 million. Loyz Energy has gained 21.5% over the past 12 months. The investor relation website can be found here.
  • Mirach (C68) is involved in oil exploration, appraisals and production. Its asset portfolio is located in Cambodia, South Sumatra and East Papua of Indonesia. Current full market capitalisation is S$58 million. Mirach has declined 30.3% over the past 12 months. The investor relation website can be found here.
  • Ramba Energy (R14) is also involved in oil exploration, appraisals and production. The company’s portfolio of oil and natural gas assets are located in South Sumatra and West Java of Indonesia. Due to its holdings of a logistic business, Industrial Classification Benchmark (ICB) have Ramba Energy is categorised to Industrial Transportation Sector as discussed in a recent Market Update.  Current full market capitalisation is S$192 million. Ramba Energy has gained 71.4% over the past 12 months.  The investor relation website can be found here.
  • RH PetroGas (T13) is involved in exploration, development and production of oil and gas. Its portfolio of assets is located in China, Indonesia and Myanmar. RH PetroGas completed its transition from an electronics manufacturer to an upstream oil and gas company in 2010. Current full market capitalisation is S$307 million. RH PetroGas has gained 4.2% over the past 12 months.  The investor relation website can be found here.

 
The Industry Classification Benchmark currently categorise two of the above stocks to the Exploration & Production sector, Interra Resources and Mirach Energy.
 
Other stocks categorised to the ICB Exploration and Production subsector are China Aviation Oil (G92), Chemoil Energy USD (AV5), Sinostar PEC Holdings (C9Q) and Ouhua Energy Holdings (AJ2). China Aviation Oil is involved in the supply, distribution and trading of Jet Fuel while Chemoil Energy USD is involved in the distribution of marine fuel.  Sinostar PEC Holdings is involved in the production of Gas and Ouhua Energy Holdings is involved in the processing of gas.
 
During last week’s SGX My Gateway event, Mr Peter Cockcroft provided an educational overview of the oil exploration sector in addition to the sector risks and the popular valuation methods used by broker research analysts. Risks that were detailed by Mr Cockcroft were related to exploration, geology, contracts, government, political, developmental, natural, terrorists, environmental, operational, corporate, commercial and labour.
 
Mr Cockcroft noted that the common forms of valuation of oil explorers are cash flow, break-up value, finding costs, return on investment and total enterprise value to EBITDA. The total enterprise value to EBITDA term simply allows a company’s cash flow to be viewed on a debt-adjusted basis, which takes into account financial leverage on the business’ price to cash flow ratio.  

Source: SGX My Gateway

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Benefits of a balanced stock portfolio and how to achieve it

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In the first three sessions of 2013 the Straits Times Index (STI) firmed +1.84%. This morning’s open extended the 2013 gain to +2.11%. The strongest sector index over the last three sessions has been Basic Materials, followed by Consumer Goods. While all Sector Indices provided by FTSE Group are in the green over the first three sessions of 2013, all have performed differently. The REIT index gained the least over the three sessions.
 
Dividing investments over different sectors is common practice for investors that seek to diversify risk and return. Consider the recent different performances and constituents of the FTSE ST Oil & Gas Index and FTSE ST Telecommunications Index. The FTSE ST Oil & Gas Index is made up of 12 stocks versus the FTSE ST Telecommunications Index which is made up of 3 stocks.
 
On Friday, the FTSE ST Oil & Gas Index declined -0.24% while the FTSE ST Telecommunications Index gained +0.24%. This brought the 2013 to date gain for the Oil & Gas and Telecommunications Sector indices to similar levels of +1.45% and +1.53% respectively.  
 
Taking more time into consideration, the difference between sectoral performances has been more pronounced. Last year the FTSE ST Oil & Gas Index outperformed the STI by rising +23.8%. Taking reinvested dividends into consideration, the Oil & Gas Index return was boost to +27.9%. Meanwhile, the FTSE ST Telecommunications Index gained +8.6% over 2012 with dividends boosting the return to +13.8%. The simple average return of the two indices combined came to 20.9% including dividend distributions. By placing equal investment emphasis in the two sector indices, returns were smoothed across two sectors that performed differently.
 
The relative performance of the two indices was reversed in 2011. In 2011, the FTSE ST Oil & Gas Index declined -17.4%, while the Telecommunications Index gained +5.0%. Dividend distributions in 2011 meant the total return of the indices was boost to a -14.9% decline for Oil & Gas and a gain of +10.6% for Telecommunications. The simple average return of the two indices combined came to a decline of -2.2% including dividend distributions. Placing equal investment emphasis in the two sector indices reduced the risk of having all the eggs in an underperforming sector.
 
Both sector Indices have performed differently in the past with the Oil & Gas sector more cyclical than the Telecommunications Index. The past tendency for the Oil & Gas Index to swing more than Telecommunications is best exemplified through the volatility gauge for Telecommunications at 13.5%, less than half the same measure for Oil & Gas Index at 28.2% over a three year period ending December 31.
 
The five largest Oil & Gas stocks as categorised by Industry Classification Benchmark (ICB) and respective 2012 price performances are:

  • Keppel Corp (BN4, + 18.3%),
  • Sembcorp Marine (S51, +20.4%)
  • Sembcorp Industries (U96, +29.6%)
  • STX OSV Holdings (MS7, +12.1%)
  • Ezion Holdings (5ME, +156.1%)

 
The five largest telecommunication stocks as categorised by ICB and respective 2012 price performances are:

  • Singtel (Z74, +6.8%)
  • Total Access Communications USD (B2W, +14.8%)
  • Starhub (CC3, +30.2%)
  • M1 (B2F, +8.4%)
  • Keppel T & T (K11, +22.5%)  

 
Investors who wish to learn more about these stocks are encouraged to participate in the education events list below. Please note that two of the aforementioned Telco stocks, Total Access Communications and Keppel Telecommunications & Transportation are not highly active thus providing an element of liquidity risk.

 

Source: SGX MyGateWay

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Ezion Holding: Range Bound

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Ezion Holding is currently trading with the Range between $0.665 and $0.745. Ezion will only start an uptrend if this stock can break the support-turned-resistance level of $0.745.

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