KepCorp

KepCorp: +1.1% at $10.94 after signing contract to build 2 jack-up rigs worth US$360m with Mermaid Maritime's 49%-owned Asia Offshore Drilling, with option to build another 2 units which would bring total contract value to more than US$720m….

Modest volume, muted rise likely reflects recent pickup in orders already priced in; shares +10% since end-Oct. Next major catalyst will be Petrobras tender results, with most analysts tipping Keppel well placed after bid pricing released. OCBC, which has Buy call and TP of $12.50 note that new order wins by Keppel's O&M group have totaled over $2.7b Ytd vs house's FY $2.5b estimate….

Expect more newbuild orders in the industry, partly driven by the Gulf of Mexico oil spill incident which has resulted in a preference for younger and higher-spec assets. Stock likely cap at $11.06 for today.