Worth a shot: Investors dared to bet on struggling marine stocks as valuations sink to record lows

Oil prices will rebound in 2H15.

The protracted oil price rout has caused jittery investors to ditch offshore and marine stocks and brought O&M valuations to record lows.

In spite of the sell-off, analysts caution that long investors could benefit enormously by taking advantage of such low valuations and riding the expected oil price rebound in the second half of 2015.

According to CIMB, the rigbuilders are trading at 10x forward P/E and 1.7x P/BV, more than one s.d below their 5-year mean. Meanwhile, the small/mid-cap oil services sector is trading at 5.9x forward P/E and 0.8x P/BV, its 5-year historical lows.

“The conclusion that the risk of a blow-up is somewhat limited keeps our stance on the sector at Neutral. Valuations at 5-year historical lows also counterbalance the softer outlook for the sector.We believe that long investors could benefit enormously by taking a position at such historical lows and riding the anticipated rebound in oil prices come 2H15. Until then, we remain Neutral on the sector. All of our stock ratings, target prices and earnings forecasts are intact. Our top picks remain ST Engineering (STE) and Swissco,” stated the report.

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