Keppel Corp's headline net profit fell 18% to $1.8b

Here's what to blame.

According to OSK, Keppel Corp reported a FY13 headline net profit of SGD1.8bn (-18% y-o-y). Stripping out revaluation gains, impairments and divestments, core net profit fell 26% y-o-y on weaker earnings from its property, infrastructure and investment businesses.

KEP proposed a final dividend of 30 cents/share, higher than our 27 cents/share estimate.

Here's more:

Offshore & marine (O&M) margins still solid. KEP’s O&M unit booked a 4Q13 revenue of SGD 2.1bn (+21% y-o-y) and core earnings of SGD270m (+27% y-o-y) on higher margins from repeat orders. The quarter’s operating margin was 14.9%. Topline visibility remains strong, as KEP has a SGD14.2bn net orderbook.

We forecast new orders at SGD6.5bn this year – slightly less than the strong SGD7bn booked in 2013. Orders could come from Transocean (RIG US, NR) for another five jackup rigs, Pemex for six jackup rigs and a Golar LNG (GLNG US, NR) vessel conversion project, on top of the potential sale of the Can Do drillship and bookings for floating, production, storage and offloading (FPSO) jobs.

Property’s flat performance expected. KEP’s property unit reported 4Q13 revenue/net profit of SGD538m (-2% y-o-y)/SGD156m (+4% y-oy). Full-year core net profit fell 44%, as the lumpy gain from the sale of its Reflections project in 2013 was not repeated.

More provisions for infrastructure engineering, procurement and construction (EPC) contracts. Its infrastructure unit reported a SGD111m core loss in 4Q13 (4Q12: -SGD72m) as more provisions were made for the Doha North and Runcorn EPC contracts. However, the higher contribution from its Merlimau power plant cushioned the losses.