Will Singapore's largest shipbuilders ever outperform the market again?

Don't be shaken by their sharp price drop.

The stock price charts of Keppel Corporation and Sembcorp Marine do not paint a very pretty picture. Both counters have dropped steeply since oil prices crashed in late 2014, and Singapore's largest shipbuilders are yet to recover from their painful price crash.

Although the uncertainties surrounding the offshore and marine sector are yet to dissipate fully, analysts at RHB Research argue that both counters still stand a good chance of delivering above-market returns for the next decade.

RHB Research particularly highlighted that both Keppel and Sembcorp have delivered 14.7% annualised returns since January 2000, a feat that could be repeated within the next ten years.

"We believe this can be repeated, especially from the low base today caused by the oil price crisis. Both stocks’ 30-40% drop last year has set up a much lower base from which to deliver such above-market returns in the next decade," said the report.

RHB asserts that oil prices have no way to go but up in coming years, which will positively impact the share prices of Keppel and Sembcorp Marine.

"Oil consumption will likely grow to >100 million barrels per day (mmbpd) within five years from around 95mmbpd today, forcing oil prices up to >USD80/barrel (bbl) long-run marginal costs from high-cost sources. We believe even a modest recovery in this oil price level would be sufficient to reverse the flood of negative sentiment prevalent today," said the report.

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