21 Oct 2011 15:14
DJ MARKET TALK:Keppel +1.6%; CS Tips Possible US$4.4B Petrobras Orders
0713 GMT [Dow Jones] Keppel Corp. (BN4.SG) remains a top performer Friday, +1.6% at S$8.92, as analysts laud the rigbuilder's 3Q results. Credit Suisse notes the consensus-smashing net profit figure of S$406 million was driven by the OM division, where operating margins increased to 26.0% vs 24.2% in 2Q11. It says "management attributed the strong margins to improved execution as well as higher-priced contracts signed in 2007-08." On Keppel's view that it will be able to secure "a fair share" of Petrobras orders in its ongoing 21-rig tender, the house says "Keppel remains well positioned to win up to US$4.4 billion of orders through its bid for six rigs." It adds management's view that tighter credit conditions had yet to impact customers "is in line with our view that there is limited risk of order cancellations, given more favourable terms for new contracts." CS keeps its Outperform call with a raised S$12.40 target, from S$11.60 "trading at 2011E P/E of 10.6X and P/B of 2.0X, Keppel is our top pick within the Singapore O&M sector." (matthew.allen@dowjones.com)
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