3 reasons for brighter Singapore offshore & marine outlook

Maybank explains optimism on the sector.

Maybank Kim Eng said that despite margins being weaker than expected in 3Q13, it remains bullish on the Singapore offshore & marine sector's investment attractiveness.

"Our optimism is premised on three key investment themes," said the research firm.

First, it noted an upswing in rig building. Second, there is an "imminent" recovery in the oSV sector. Third and last, it foresees a "distant possibility" of a sustainable recovery in the shipbuilding industry.

"These themes are expected to play out over the next few years," Maybank said, adding that order wins could surprise positively due to the continue strength of the jackup rig market and signs among companies in the sector of record orders and robust newbuild programs.

If there is one dark spot though in the sector, it is in shipbuilding, according to Maybank.

"The recent surge in shipbuilding orders (in Yangzijiang) has fueled hopes of a cyclical rebound in the shipbuilding market. However, we are doubtful about its sustainability given strong headwinds," said Maybank.

"To turn more positive, we need a sharp rebound in price. At this juncture, this scenario looks remote considering an oversupplied vessel market, excess yard capacity and intense competition amid uncertainty over a sustainable recovery in global trades," it added.

"Furthermore, the five-year slump in the shipping industry has weakened the financial powers of many shippers, reducing their ability to place new orders," it said further.

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