Keppel Corp’s weak order wins to persist in spite of $330m contract win

Can the shipping giant weather the storm?

Analysts caution that Keppel Corp’s weak order wins will persist in spite of the fact that it opened 2015 with $330m worth of new orders.

Keppel has recently clinched a $265m iced-class vessel construction contract from New Orient Maritime, coupled with two contracts worth more than $65m comprising a multi-task AHT and technical services for a liftboat.

According to CIMB, the weak oil environment will cause Keppel to have a slower order momentum this year.
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“In view of the weaker oil price environment, we incorporate a c.50% cut in order assumptions for FY15-16 to S$2.8bn-3bn p.a. This leads to a 5-12% reduction in EPS and a lower target price of S$9.90, still based on RNAV. We see catalysts from stronger-than-expected margins from the deliveries of proprietary jack-up rigs in 2015 and a potential special dividend from the divestment gains in KepLand and Keppel T&T,” stated CIMB.

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