UOBKayhian on 23 Jan 2015
FY15F PE (x): 9.7
FY16F PE (x): 10.2
Excluding exceptional gains, results were within our expectation. 4Q14’s O&M operating margin of 13.2% was lower than 3Q14’s 14.9% (4Q13: 14.6%). Contract wins of S$5.5b in 2014 were marginally ahead of our forecast of S$5b. However, we lower our net profit forecasts for 2015-16 by 5-10% on lower contract win assumptions. Maintain HOLD but we cut target price from S$9.50 to S$8.80, pegged at 9.5x 2016F PE.
Maintain HOLD, but cutting our target price from S$9.50 to S$8.80, based on the sum of-the-parts valuation which values Keppel’s O&M business at a 2016F PE of 9.5x. Amid low oil prices, Sembcorp Industries (BUY/target: S$5.95) – with half of its earnings from its relatively defensive utilities business - is the most defensive largecap stock in the Singapore offshore & marine space.
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