Keppel Corp. (BN4.SG) bucks the weak market and is up 1.4% at $11.98, compared with the STI falling 0.8%, after announcing two shipbuilding contracts worth $170 million.
IIFL Institutional Equities expects $10 billion of new orders in 2011, surpassing the previous peak of $7.4 billion in 2007. “This will manifest into 30% core earnings growth in FY12 and FY13. We expect the offshore & marine business to dominate group earnings (78% in FY12) and urge investors to skip their ’conglomerate discount’” and treat it as an offshore and marine play.
The house’s target price of $16.96 suggests 41% upside from current levels and it reiterates its Buy call. It adds, of the 11 new-build jack-up orders in the first two months of 2011, “two orders from Clearwater Capital, an investment fund, suggest that even rig speculators (or ’smart money’ as per the management) are jumping on the boat.”
Orderbook quotes suggest $12.00 may cap gains during the session.
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