Troubled Keppel Corp ( Valuation: 2.40, Fundamental: 1.30) could be saddled with more writedowns from its newbuild jack-up rig contracts, beyond those from Sete Brasil, says OCBC ( Valuation: 2.55, Fundamental: 2.20) Investment Research.
About 12 of 21 such contracts could be at risk of provisions as they have been mostly deferred by requests from customers, it estimates.
“Should oil prices stay low, we believe that the risk of further delays or even cancellations will rise,” OCBC analysts Low Pei Han and Carey Wong write in a note on Friday.
OCBC expresses concern that there could be more provisions to come as Keppel has been “reticent” about how it arrived at the $230 million provision made in 4QFY2015.
It maintains a “hold” rating for the stock with a lower fair value of $4.38.
In the worst case scenario of a complete write-down in the offshore & marine order book, OCBC says it will slash fair value to $3.91.
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About 12 of 21 such contracts could be at risk of provisions as they have been mostly deferred by requests from customers, it estimates.
“Should oil prices stay low, we believe that the risk of further delays or even cancellations will rise,” OCBC analysts Low Pei Han and Carey Wong write in a note on Friday.
OCBC expresses concern that there could be more provisions to come as Keppel has been “reticent” about how it arrived at the $230 million provision made in 4QFY2015.
It maintains a “hold” rating for the stock with a lower fair value of $4.38.
In the worst case scenario of a complete write-down in the offshore & marine order book, OCBC says it will slash fair value to $3.91.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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