Maybank Kim Eng is maintaining its “sell” on Keppel Corp and lowering its target price to $4.42 as it believes the recent sentiment-driven rally is unsustainable without EPS growth visibility.
In a Tuesday report, analyst Yeak Chee Keong said the writedowns and cancellations of its offshore and marine division have not all been priced in.
1Q16 O&M revenue dipped 58% on year and 38% on quarter as contracts got deferred, while Sete Brasil recognition was suspended. Keppel also revealed that two more jackups 9Clearwater and BOT Lease) and two unnamed semisubs have been deferred.
“We estimate that O&M’s FY6-18E revenue will contract to $4-4.5 billion vs the $6.2-8.6 billion over the last three years.”
Net orderbook at 1Q end was $8.6 billion but that includes about $4 billion of Sete Brasil orders and about $1 billion of Transocean orders that were deferred to 2020.
Order replenishment has been weak, with only a $190 million win year to date, 12% of OCBC’s $1.6 billion forecast for FY16.
“We think the market has yet to price in further asset write-downs if current deferments turn into cancellations,” says Yeak.
Ar 9.42am, Keppel is up 0.17% at $6.01.
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In a Tuesday report, analyst Yeak Chee Keong said the writedowns and cancellations of its offshore and marine division have not all been priced in.
1Q16 O&M revenue dipped 58% on year and 38% on quarter as contracts got deferred, while Sete Brasil recognition was suspended. Keppel also revealed that two more jackups 9Clearwater and BOT Lease) and two unnamed semisubs have been deferred.
“We estimate that O&M’s FY6-18E revenue will contract to $4-4.5 billion vs the $6.2-8.6 billion over the last three years.”
Net orderbook at 1Q end was $8.6 billion but that includes about $4 billion of Sete Brasil orders and about $1 billion of Transocean orders that were deferred to 2020.
Order replenishment has been weak, with only a $190 million win year to date, 12% of OCBC’s $1.6 billion forecast for FY16.
“We think the market has yet to price in further asset write-downs if current deferments turn into cancellations,” says Yeak.
Ar 9.42am, Keppel is up 0.17% at $6.01.
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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