Maybank Kim Eng raised its target price on rigbuilder Keppel Corp to $13.30 from $12.90, and kept its ’buy’ rating to reflect the higher share prices of some of its units such as Dyna-Mac Holdings.
At 10:21 a.m., Keppel shares were down 0.97% at $11.23. They have risen 20.8% this year, compared with the Straits Times Index’s 14.9% rise. Dyna-Mac, which is about 27%-owned by Keppel, has gained 16.5% this year.
Maybank expects Keppel to report a 22% year-on-year fall in its third quarter net profit to $317 million, due to lower offshore and marine margins. But the brokerage is not concerned about weaker earnings as it expects orders forrigbuilders to continue.
“We may even see some margin expansion for new contracts as pricing power shifts to the yards due to tightness in yard slot availability,” Maybank said in a report.
The brokerage expects Keppel’s offshore and marine operating margins to have reached a bottom of 13.2 % in the second quarter and sees an improvement in the next two quarters.
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