Keppel    Last:6.62    +0.02

Keppel Corp

 

 

KIM ENG - BUY

TP - S$15.00

Keppel?s O&M division will be the mainstay of the company for the foreseeable future, with its net order book at some S$11.3bn. While the pace of new orders has slowed somewhat over the past few months, Keppel has indicated that the outlook for overall demand remains healthy. For property, Keppel Land?s prospects will be driven by local and regional projects, especially in Vietnam. Local property prices will also drive earnings for Keppel?s own land bank such as Reflections at Keppel Bay and environs. We are adjusting our FY07 forecast to S$1102.5m from S$958.5m,or an EPS of $0.697, mainly on the back of a better outlook for SPC, offset by a lower contribution from infrastructure. Similarly, FY08 earnings are revised to S$1,177.5m from S$1,064.8m. We are also adjusting our sum-of-parts fair value for Keppel to S$15.00 to reflect the earnings revision and adjustment for the market prices of listed subsidiaries and associates. Reiterate BUY

 

DBS Vickers - BUY

TP - S$15.10

No significant changes to forecast as upward adjustments at SPC and KepLand offset the lower contributions from Infrastructure. We expect the O&M division to make up the bulk of KpeCorp?s group earnings at 64% in FY07 underpinned by its S$12bn order book. A net dividend of 8.7Scts has been declared. Maintain Buy with a revised RNAVbacked target price of S$15.10.

 

Target price revised to S$15.00; maintain BUY.


Keppel's O&M division will be the mainstay of the company for the foreseeable future, with its net orderbook at some S$11.3b. While the pace of new orders has slowed somewhat over the past few months, Keppel has indicated that the outlook for overall demand remains healthy. For property, Keppel Land's prospects will be driven by local and regional projects, especially Vietnam. Local property prices will also drive earnings for Keppel's own landbank such as Reflections at Keppel Bay and environs. We are adjusting our FY07 forecast to S$1102.5m from S$958.5m or an EPS of $0.697, mainly on the back of a better outlook for SPC, offset by a lower contribution from infrastructure. Similarly, FY08 earnings are revised to S$1,177.5m from S$1,064.8m. We are also adjusting our sum-of-parts fair value for Keppel to S$15.00, to reflect the earnings revision and adjustment for market prices of listed subsidiaries and associates. We reiterate our BUY recommendation.

 

OCBC Maintain BUY

"With several positives going for the group including record order book and the high oil price environment supporting its O&M operation, there is good earnings visibility for KepCorp."

 

With the record earning of $510 million in the first half, the Directors are pleased to declare a higher interim dividend of 9.0 cents per share comprising 1.5 cents per share less tax and 7.5 cents per share one-tier tax exempt (2006: 6.0 cents per share less tax).

The dividend will be payable to shareholders on 22 August 2007.

 

 

SECOND QUARTER ENDED 30 JUNE 2007

Financial Performance

On behalf of Keppel Corporation?s Board and management, I am pleased to deliver to you another strong set of results. For second quarter 2007, we achieved a PATMI of $258m, a 32% growth compared to the same quarter in 2006. This brings our first half PATMI to $510m, an increase of 39% compared to the same period last year, with increased contributions from Offshore & Marine, Property and Infrastructure as well as SPC.

Correspondingly, our EVA for first half 2007 was strong. EVA rose 90% from the same period last year to $365m, on the back of ROE rising to an annualized 20.5% from 19.1% a year ago.

 

1H 2007 REPORT CARD

1. PATMI improved 39% to S$510 million compared to 1H2006?s S$366 million.

2. Earnings per share of 32.3 cents, up 39% from 1H2006?s 23.2 cents.

3. Annualised ROE rose from 19.1% to 20.5%.

4. Economic Value Added increased S$172 million to S$365 million.

5. Free cash flow of S$696 million.

6. Net gearing lowered to 0.16x from 0.24x.

7. Interim dividend increased 82% to 9 cents per share.

 

Quotes:

From: BT

Published July 24, 2007

Marubeni, Keppel and SembCorp eye S'pore gencos: sources (SINGAPORE) Marubeni Corp, Keppel Corp and SembCorp Industries Ltd plan to bid for the electric utilities being sold by Temasek Holdings, the Singapore investment company, three bankers with knowledge of the deal said. Energy asset: SerayaPower's net income rose 11% to S$130m in 2006. The gencos account for some 90% of Singapore's generation capacity. Singapore-based Keppel and SembCorp, the world's biggest oil-rig builders, this month contacted lenders to provide financing and advice, said the bankers, who declined to be identified because the talks are private. The units, Power Senoko Ltd, PowerSeraya Ltd and Tuas Power Ltd, may be valued about S$2.5 billion each and sold in stages over the next two years, they said. Temasek, which said on June 19 that it is selling the businesses, revived the plan after a six-year delay to tap rising demand for power assets. The utilities account for 90 per cent of Singapore's generation capacity and may attract investors in the Asia-Pacific region, where US$53.5 billion of acquisitions involving energy companies have been announced this year. Temasek 'will benefit from bullish investor sentiment in infrastructure assets', said Leslie Phang, who oversees US$1 billion at Commonwealth Private Bank in Singapore. 'Buyers would snap it up in a jiffy because historical profit growth of the three power companies supports the valuation.' Seraya's net income rose 11 per cent to S$130 million in 2006, according to the company's annual report. Senoko's profit gained about 12 per cent to S$133.3 million, while Tuas Power had net income of S$104 million as sales surged 27 per cent to S$1.7 billion, annual reports show. 'As a key player in Singapore's energy market, greater involvement in the local generation companies would seem a natural fit with our core business,' SembCorp said in an e- mailed response to questions. 'The decision to sell the generation companies has just been announced, and we are evaluating our options.' Keppel and SembCorp are seeking commitments from lenders to lock them in exclusive relationships because competition for funding will intensify as the sale progresses, the bankers said. 'We are keen to evaluate the opportunities that Temasek's divestment of power plants present,' Mr Ong Tiong Guan, managing director of Keppel's infrastructure arm, Keppel Energy Pte, said in an e-mail. 'If it makes commercial sense, we will participate in them.' Marubeni spokesman Daigo Noguchi declined to comment on whether it will bid. CLP-Mitsubishi Venture OneEnergy Ltd, a joint venture between CLP Holdings Ltd and Mitsubishi Corp, plans to request proposals this week to appoint a financial adviser, the bankers said. CLP Holdings 'has previously indicated that Singapore is a market CLP is interested in', said Carl Kitchen, public affairs manager at the company, which owns half of OneEnergy. 'But regarding the specific assets, it's too early to comment on whether CLP is bidding.' Temasek plans to release relevant information to potential bidders and the sale process could start in September, said Wong Kim Yin, managing director for investments at the company. Temasek said in its June 19 statement that the sale will be completed by end-2008 or early 2009. Morgan Stanley and Credit Suisse Group are advising Temasek on the sale. Temasek said yesterday it will invest 1.4 billion euros (S$2.9 billion) initially in Barclays plc, and an additional 2.2 billion euros upon the London-based company's purchase of ABN Amro Holding NV in the biggest banking takeover. China Development Bank will invest 2.2 billion euros in Barclays, and a further 7.6 billion euros if the bid for ABN Amro succeeds. Barclays raised its offer for ABN Amro to 67.5 billion euros after securing the investments. Gas Supply Singapore generates 80 per cent of its electricity from natural gas imported from Malaysia and Indonesia. Blackouts in Singapore in November 2003 and June 2004 were caused by disruptions in gas supply from Indonesia, according to Energy Market Authority, the government regulator. 'The biggest risk is, however, the potential supply disruption of gas from Indonesia and Malaysia,' Commonwealth Private Bank's Mr Phang said, and 'rising commodity costs may put a dent on profitability'. Singapore plans to invest S$1 billion in a liquefied natural gas terminal by 2012 to meet one-third of the country's gas demand. The facility will provide an alternative supply source. Seraya and Tuas were set up in 1995, and have generation capacity of 3,100 megawatts and 2,670 megawatts, respectively. Senoko has a capacity of 3,300 megawatts, according to Temasek's June 19 statement. -- Bloomberg

 

Singapore Petroleum says Q2 net profit up 32 pct

(SPC) , the oil and gas refining and marketing firm, reported a 32 percent rise in second-quarter net profit on Wednesday due to robust refining margins.

The company said it earned a net profit of S$179.2 million ($119 million) for the April-June period, compared with S$135.7 million in the same quarter of 2006.

Keppel Corporation Ltd. , the world's top offshore oil drilling-rigs builder, owns 45 percent of SPC.

 

Yesterday (16/7/07), Morgan Stanley lifted its target price for the stock to $15.00 from $12.00 with an 'overweight' rating in anticipation of potential earnings upside from Keppel's O&M division and property arm, which owns a 53% stake in Keppel Land and 70% of Keppel Bay.

'We think consensus earnings estimates for Keppel for 2007 and 2008 are conservative and upward earnings revisions should take the stock higher,' MrChoudhary said.

Citigroup is keeping its 'buy' rating on Keppel Corp with $13.60 target in view of the firm orders momentum. A Bloomberg poll of 14 analysts predicted that the company will post a net profit between $929.7m and $1.07bn for the full year ending Dec 31.

 

Shares of Keppel Corp. the world's top offshore oil rig maker, rose as much as 3.1 percent to an all-time high of S$13.30 with 1.4 million shares traded after Morgan Stanley raised its price target for the stock to S$15 from S$12.

Morgan Stanley lifted Keppel's price target after factoring in above-consensus earnings estimates, higher contract expectations and new markets opening up for the company, among other reasons.

"We recommend that investors stay invested in this sector."

 

Keppel Corporation - Wins big contracts worth US$534 mln Yeo Sue En, 25 Jun 2007 Keppel Corporation has won two rig contracts from Skeie Group and Seadrill Asia Limited worth US$400 mln and US$134 mln. The rigs will be delivered by Q4 2010 and Q4 2009 respectively. This is Skeie Group's third order from Keppel and Seadrill Asia's fifth order.

 

Singapore's Keppel wins two contracts worth $534 million



SINGAPORE, June 25 (Reuters) - Keppel Corp. Ltd. , the world's largest builder of offshore drilling rigs, said on Monday it has won two contracts worth a total of US$534 million to build a jack-up rig and a deepwater drilling rig.

The first contract, worth US$400 million, is for a third jack-up rig for Norway's Skeie Group. The second contract, from Seadrill Asia Ltd., is for a semisubmersible drilling tender and is valued at US$134 million.

 

Good news.  One more reason to HOLD this for long term. 

 

It rose after a Citigroup report said Keppel could double its order book to $5 billion by the end of '07 on the back of strong demand.

"Our $5 billion new order assumption is realistic, and there could be upside to these numbers considering the industry strength and the brisk activity seen by Keppel," said Citigroup analyst Kevin Chong in a client note.

The latest US$427 million contract awarded by U.S offshore driller Ensco International also highlighted a long-term relationship with Ensco, said Chong.

He noted that the latter has awarded Keppel about US$4.5 billion worth of projects in the last 10 years.

Chong has a "buy" rating and target price of $13.60 on the stock.

 

Singapore's unit to build rig for ENSCO worth 427 mln usd      6/7/2007 7:23:00 PM

SINGAPORE (XFN-ASIA) - Keppel Corp said its unit Keppel FELS Ltd has secured an order from ENSCO International Inc to build an ultra-deepwater semisubmersible (semi) drilling rig valued at 427 mln usd. The firm said it is the fourth semi that it is building for ENSCO, which will be delivered in the third quarter of 2010. Keppel Corp said the contract is not expected to have a material impact on the net tangible assets or earnings per share of the company for 2007. (1 usd = 1.53 sgd) yuinmunn.szetoh@xfn.com MMMM