(Stocks Discussion) SGX: Viking Offshore And Marine Limited (SGX: 557)?

The stock is in a heavily cyclical industry. Oil prices are very volatile,and commodities go through cycles, so there is a fair chance that oil will recover, although we will not know when.

However, the question to ask is whether the company will survive till the recovery comes. Bigger companies like Keppel have cash reserves to withstand any down periods, but a smaller company might flounder and struggle (think Swiber).

Having worked in a supermajor and an oil field service company previously, I have seen drastic cuts in projects when oil prices plunge to unsustainable levels for development. I'd avoid cyclical companies if possible and only invest as part of swing trading on a bigger market cap player such as Keppel. The stock's suspended at any rate. This current environment of low oil prices is taking it's toll on many smaller players.

I folow the O&G industry as it is one of the areas i specialise my investments in.

Viking Off shore belongs to the oil support equipment industry. Despite oil prices climbing up, there is still an overglut of oil equipments avalaible for lease such as barges etc. What I am hearing is that the Chinese yards are mass producing still to support their own dying industry. This supply glut is still in a pretty bad situation, best to avoid.

Furthermore, viking is now trying to restructure its debt, massive shareholder dilution is likely to take place