Company Name: KEPPEL CORPORATION LIMITED
| Research House: DBS Vickers | Price Call: BUY | Target Price: 12.65 |
The pricing for the two semisub contracts Keppel secured from Ukraine’s Naftogaz is fair at about US$600 million/unit, considering the additional customization required for the Black Sea, DBS Vickers says.
It notes Keppel’s last semisub order in August 2008, the market peak, was at US$560 million ($732 million), while SembMarine’s (S51.SG) April semisub project was priced at US$568 million. “These orders support our view for a return of semisub orders which had been lacking over the 2009-2011 period.”
It expects semisub orders to be supported by sustained high global fleet utilisation rates, a declining orderbook and a highly aged fleet, with about 61% more than 25 years old. It adds, these orders are a major boost to Keppel’s year-to-date ex-Petrobras order wins, now at $4.2 billion vs the house’s forecast for $5.0 billion for the full year, while including Petrobras, Keppel’s orders wins are at $10.5 billion vs the house’s $11.3 billion full-year assumption.
It keeps a Buy call with $12.65 target. The stock is flat at $10.66, in line with the STI’s 0.1% decline.
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