Wednesday, February 16, 2011

Keppel +1.3%;FY11 order flow set to smash estimates

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED
Research House: OCBC

Keppel Corp. (BN4.SG) is +1.3% at $11.36 after announcing an order from Maersk to build two harsh environment jack-up rigs worth US$1 billion ($1.3 billion), its third order win in the last week.

OCBC, which has a Buy call and a $13.24 fair value, says “as the search for oil goes into deeper waters and harsher conditions, the demand for high-spec jack-ups with better operational capabilities should continue to hold up better than standard jack-ups.”

It notes Keppel’s O&M arm has secured contracts worth about $2.8 billion year to date (vs $3.2 billion for 2010), accounting for 60% of its 2011 estimate (excluding Petrobras). “Should the new order momentum continue, we see upside risk to our estimates.” 
RBS, which has a Buy call and a $13.50 target, says “this is one of the more significant order wins for Keppel over the last two years,” which represents “close to a quarter of our 2011 new order assumption and year-to-date the company has won orders worth 62% of our full-year assumption - which we believe is very much ahead of schedule.”

 

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