Kep Corp: The quality yardstick

Keppel Corp could announce another S$1bn of jack-up orders from Mexico, according to Rigzone. This will bring 2013 new orders to S$1.8bn or 29% of our S$5.5bn target. We expect 26% profit growth for Keppel’s O&M business in FY13, thanks to the delivery of 21 jack-ups.   From our recent meetings with Keppel and some HK investors, we gleaned that the margins for the four jack-ups delivered YTD are “pretty good”. We think that O&M EBIT margin could reach 14.5% in FY13, trumping management’s 10-12% target due to backloaded profits from these deliveries. We retain our Outperform call and RNAV-based target price. Catalysts include margin surprises and stronger orders.


Read? CMIB on Keppel Corp