CIMB Research on 12 March 2013
WE believe that Keppel's pipeline of orders is still strong. This has given the company the freedom to cherry-pick its projects, as it walked away from the two semi-submersibles contract (US$1.2 billion) with Ukraine's Naftogaz. We maintain our "outperform" rating.
We are not surprised by the move as management had dropped hints in its Q4 2012 results briefing that the group was prepared to not pursue the contract if certain conditions were not met. Keppel has already won about $570 million worth of new contracts YTD, or 10 per cent of our full-year $5.5 billion. Near-term catalysts could come from jack-up rig contracts from Mexican Grupo R (about $1 billion in total). We retain our revalued net asset value-based target price.
OUTPERFORM
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