Keppel Corp contract wins for 2014 missed the target by $2.3b

Oil prices are not the major concern, though.

Keppel Corp is in a relatively good mood with its recent contract wins, but an analyst thinks that it is somewhat behind expectations for this year.

According to OSK-DMG, Keppel has won c.SGD3.7bn of contracts YTD, appearing somewhat behind schedule vis-à-vis its SGD6bn FY14 order win forecast. Yet, OSK-DMG notes that such wins tend to be lumpy and it could still pull a rabbit out of the hat at the last minute.

Here’s more from OSK-DMG:

We estimate values for the 13 jack-up rig and two floating liquefied natural gas (FLNG) options at a combined SGD5.4bn, with expiry dates mostly in FY15.

While oil prices have become more volatile lately, we see investments still going ahead for shallow-water units like jack-up rigs and production platforms like FLNG vessels. Keppel’s operational performance demonstrates relatively low correlation with oil prices, and we believe the stock’s 4.7% yield remains attractive to investors. Maintain BUY with a SGD12.50 SOP-based TP.