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

Question

Discuss anything about Viking Offshore And Marine Limited SGX: 557 share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment in Viking Offshore And Marine Limited SGX: 557

Elijah Lee · Accepted Answer

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.

Bjorn Ng · Answer

Hey there! Please allow me to share my two cents worth. I am not personally vested in VOML (or any O&G industry for that matter).

The Oil & Gas sector has been hit since 2015 and even though you see people saying market is slowly recovering, it will definitely not go back to the highs of 2015. I am in the Oil & Gas industry and have been talking to several experienced industry personnels, even if 1 day oil prices spike up, it'll still be a temporary movement. There are too many supply of such equipment and with oil prices stagnanting, the day rates are also not looking too good (barely breaking even).

I would advise against investing in the O&G industry due to its cyclical nature. ​​​

Choon Yuan Chan · Answer

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