Keppel Corp: secured a US$260m contract from Floatel Int’l to build an accommodation semisub for delivery in 1Q14. This is KEP's 3rd accommodation semi project with Floatel, with delivery of 2 units last yr. The new vessel will be built with Dynamic Positioning (DP) 3 capability; pricing is lower than the previous DP3 unit ordered in 2007 at US$305m but still higher than an older DP2 unit ordered in 2006 at US$206m...
The new vessel meets the stringent UK HSE requirements to work in the UK sector of the North Sea as well as the Gulf of Mexico, Brazil and Western Australia. It can accommodate up to 500 persons. While this vessel is used for O&M support services, it indicates the continued strength in the deep water segment...
Ytd, KEP orderbook wins amount to $7b, vs Street full year order forecasts of btwn $9-10.5b.
With 61% of semi-subs and 65% of jackups globally being older than 25yrs, the replacement cycle still has room to play out. KEP, SMM, with 41% and 20% mkt share r’ptvly, are well positioned to take advantage of the continued rig order momentum...
Concerns about yard capacity should be limited for now, as KEP currently has ~30 rig orders on hand, vs 48 rig/vessel units on order back in 2007.
The majority of Street has Buy ratings on KEP, with recent TP ranging btwn $12.70 – 15.30.
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