Kepcorp: Citi note of more Surprises in store in 2012.
Midway through the Newbuild Cycle, sector fundamentals remain resilient and a resumption of the newbuild cycle is on the horizon. Expect the under-investment in semisubs (since 07) to reverse and play catch-up to drillships.
Raise orderbook assumptions by 20-25% over 2012-13E and expect order wins to reach $5b for next two yrs. Maintain Buy, TP $12.00 from $10.35 and see further upside given a potentially stronger orderbook scenario. Raise fair value multiple for the O&M to slightly above mid-cycle valuations.
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