Keppel's 35.4% profit surge will not recur in 2H12

Too bad the whopping S$520.9m earnings won't happen again.

According to OCBC, Keppel management has stressed that the good showing in 1H12 is exceptional and will not be repeated in 2H12, as earnings were largely supported by one-time profits from the property division. "We understand that contribution from Reflections accounted for more than three quarters of the property arm’s net profit in 1H12."

Here's more from OCBC:

Keppel Corporation reported a 52.2% YoY rise in revenue to S$3.5b and a 35.4% increase in net profit to S$520.9m in 2Q12, such that 1H12 net profit accounted for 78% and 80% of ours and the street’s full year estimates, respectively.

Lumpy earnings from the property division boosted net profit, and this is not expected to recur in 2H12. Operating margin in the O&M division continued to normalize to about 12% in the quarter, in line with management’s guidance. Meanwhile the group’s net order book stands at S$7.6b, with deliveries extending to 2015. KEP remains optimistic about the return of semi-submersible orders, given the tight supply of deepwater rigs.

We fine-tune our estimates and update the market values of KEP’s listed entities, such that our fair value estimate eases slightly from S$13.38 to S$13.34. In line with our expectations, an interim dividend of S$0.18 has been declared.

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