Keppel Corp: Likely to gain with orderbook momentum not letting up as company secures US$180m contract to build jack-up rig for Norway's Standard Drilling. Deal comes with options for another 2 rigs, which would bring combined contract value to US$550m if exercised. Rig due for delivery in 2H 2012...
Order in-line with sector wide pick-up in demand for high-specification rigs. Goldman Sachs note that Standard Drilling's order is even more significant for the industry as it marks the return of speculators to the cycle, recalling that speculators were a major driver for the last rig-building cycle, and Standard Drilling's order could set the pace for more. This could be another sign for a strong cycle ahead….
Order win brings YTD order wins to $2.9b, placing Total Net Order Book at approximately $5b, with deliveries till 2013. Kim Eng maintains Buy call with $11.70 TP, while Morgan Stanley, Deutsche and Citi all have Buy Calls with $12.25, $12.50 & $12.80 TP respectively. Technically, resistance eyed at 52-week high of $11.06.
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