SGX: Structured Warrants of the Maritime and Offshore Services Sector

OREANDA-NEWS. Sentiment in the maritime & offshore services sector is largely driven by the outlook for global trade, which can also impact energy prices, shipping rates and ongoing maritime developments.

Singapore’s Maritime and Offshore Services Sector

Singapore’s maritime and offshore services sector is made up of 62 stocks with a combined market capitalisation of more than S$40 billion. The sector is represented by 33 offshore services stocks, 14 shipyards, 12 shipping stocks and three business trusts.

Of the 62 stocks, 52 are listed on the Mainboard and 10 are listed on Catalist. The most recent stock to join the segment was NauticAWT which listed on Catalist on 23 July. Following its offer price of S$0.20, the stock closed yesterday at S$0.22. NauticAWT is a Singapore headquartered firm offering subsurface, subsea and surface facilities engineering services and contracting solutions for field exploration, field development and field refurbishments including design life extensions and production enhancement for ageing and mature oil and gas fields.

Structured Warrants on Maritime and Offshore Services Stocks

Six of the 62 stocks have associated structured warrants - Keppel Corporation, SembCorp Marine, Ezion Holdings, Neptune Orient Lines, Yangzijiang Shipbuilding Holdings and Ezion Holdings. In total there are 24 warrants associated with the six stocks. Two of these stocks - Keppel Corporation, SembCorp Marine and Yangzijiang Shipbuilding Holdings are a part of the Straits Times Index (STI). All six stocks have recently released quarterly earnings reports:

• On 22 Oct, Keppel Corp released their financial statements for the quarter ended 30 Sept 2015.
• Also on 22 Oct, Sembcorp Marine released their financial statements for the quarter ended 30 Sept 2015. In the month of November, Sembcorp Marine conducted a share buyback, purchasing 559,200 shares for a total consideration of S$460,553.73. Another share buyback was conducted on 27 Oct, involving 359,200 shares for a total consideration of S$474,830.89.
• On 30 Oct, Neptune Orient Lines released their financial statements for the quarter ended 30 Sept 2015. More recently, Neptune Orient Lines announced the cessation of APL Lanka Private Limited as an associated company of NOL. Neptune Orient Lines also filed a response to queries regarding trading activity yesterday.
• On 4 Nov, Yangzijiang Shipbuilding Holdings released their financial statements for the quarter ended 30 Sept 2015. On 3 Nov Yangzijiang Shipbuilding announced the subscription of shares in Shanghai Chengding New Yangzi Investment Partnerships Enterprise and Shanghai Chengding New Yangzi Investment Management Partnership Enterprise. More recently on 14 Nov,  Yangzijiang Shipbuilding announced the entering into shipbuilding contracts for additional twelve vessels.
• On 12 Nov, Ezion Holdings released their financial statements for the quarter ended 20 Sept 2015.
• On 23 Oct, Ezra Holdings released their financial statements for the financial year ended 31 August 2015.

A choice of 24 warrants to leverage your view

Structured warrants present an alternative means for investors to leverage their views on the price performance of the aforementioned counters. Warrants issuers appoint designated market-makers to provide continuous bid-offer prices and enhance liquidity for investors.

Keppel Corp was the second most active underlying for stock warrants, after DBS Bank, in the month of October with a total traded value of S$18.2 million in both call and put warrants. Trading interest in warrants on SembCorp Marine and Yangzijiang Shipbuilding surged by 200% and 156% respectively on the back on corporate announcements and increased volatility. 

There are currently 24 warrants on the five aforementioned underlying stocks and Ezra Holdings  – 11 warrants on Keppel Corp, four warrants on NOL, three warrants on Sembcorp Marine, three warrants on Yangzijiang Shipbuilding, two warrants on Ezion Holdings and one warrant on Ezra Holdings – to cater to investors’ differing risk appetites and investment horizons. 

In the month of November thus far, the most active of these warrants is KEPCORP MB ECW160201 that traded a total of  S$1.3 million.

Structured warrants is one type of Specified Investment Products (SIPs) under MAS’ proposed regulatory framework to introduce measures for intermediaries to safeguard the interests of individual investors for products with features which may be more complex in nature.