Company Name: KEPPEL CORPORATION LIMITED
| Research House: UOB KayHian | Price Call: BUY | Target Price: 12.30 |
UOB Kay Hian cut its target price on Keppel Corp, the world’s largest rigbuilder, to $12.30 from $12.80, but kept its ’buy’ rating, citing lower operating margin assumptions.
By 10:08 a.m., Keppel shares were up 0.1% at $10.56, and have risen 13.5% since the start of the year, compared with the Straits Times Index’s 12.9% rise.
UOB lowered its offshore and marine margin estimates for Keppel in 2013 and 2014, which resulted in a 4% lower net profit forecast for next year. However, higher infrastructure earnings will help to support earnings in 2014.
Higher operating margins seen from 2010 to mid 2012 were mainly due to lucrative contracts secured during the boom years of 2007-2008, UOB said.
“We believe Keppel stands a good chance of registering higher offshore and marine margins than Sembcorp Marine as it is building semi-submersible rigs for Brazil,” which are not new to the company, the brokerage said.
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