Keppel T&T

CIMB Research, Jan 21

FY2013 net profit of S$63.2 million was broadly in line with our expectation and formed 102 per cent of our full year estimate. We revise up our FY2014 to 2016 EPS by 2-3 per cent for the higher-than-expected margins, with a slightly higher sum of parts-based target price of S$1.94.

However, we downgrade the stock from "add" to "hold" as we believe that the positives have largely been priced in. The share price has rallied since Keppel T&T (KPTT) announced its intention to inject its data centres into a Reit in H1 2014, which we think has been overdone. While we are positive on the news, we believe it will take time for KPTT to reinvest the funds raised from the IPO to make a meaningful impact on its earnings.

HOLD