OCBC cuts target on Keppel Corp to $12.12

Stock Name: Kep Corp
Company Name: KEPPEL CORPORATION LIMITED

Research House: OCBC

Price Call: BUY

Target Price: 12.12

OCBC Investment Research has cut its target price on Singapore oil rig builder Keppel Corp (KPLM.SI) to $12.12 from $12.92 but maintained its buy rating.

OCBC said its earnings estimates for Keppel Corp’s 2012 fiscal year and beyond could be at risk if the global economy worsens in the coming quarters, especially in a situation of tighter financing.

Keppel Corp’s property arm, Keppel Land (KLAN.SI), also faces headwinds as the uncertain economic outlook is expected to affect demand for office space, OCBC said, adding that rentals could dip with more office supply coming onstream.

However, the broker said Keppel Corp has a robust order book of $9.1 billion that extends till 2014 and the rig builder is supported by its strong balance sheet and track record.

Keppel Corp has also been improving its efficiency and product offering, OCBC said. At 10:01 a.m., Keppel Corp shares were up 0.4% at $8.55. The stock has fallen around 17% so far this year.