Is Keppel kicking off 2016 with a weak start?

It has just bagged its first contract of the year.

Keppel has bagged its first contract for the year, and though it be but little, it is fierce, according to a report by DBS.

The contract is valued around $190m, and was secured through Keppel’s Brazilian yard, BrasFELS. The deal will see Keppel fabricate and integrate an FPSO module for its long-standing customer MODEC Offshore Production Systems (MODEC).

Upon completion in 3Q17, the FPSO will be deployed at Taratuga Verde and Taratuga Mestica Fields in the Campos Basin, off the Rio de Janeiro coast.

“While this is the first order of the year for Keppel and the contract value is not spectacular, we think it is commendable in the current climate,” DBS asserts.

Further, FPSO projects are generally less vulnerable to deferment or cancellation risks. Most FPSO projects remain on favourable milestone payment terms, and they are often backed by long-term charter contracts as well.

Additionally, MODEC is a repeat customer of Keppel. It has a healthy balance sheet with marginal net gearing as at end-2015.