Keppel Corp

Keppel Corp: Announced strong 4Q11 results which were broadly in-line, albeit at the higher end of estimates. Rev at $2.8b, +31% yoy and +3.7% qoq, while net profit at $389m, +11% yoy and -4.2% qoq and vs consensus estimates of $380m. Result brings FY11 Rev to $10.1b, +10.3% yoy and Core net profit to $1.5b, +14.1% yoy, operating margins improved slightly at 18.8% vs 17% yoy.

Strong performance driven by grp’s O&M Division with rev at $5.7b, capturing a good share of global high spec jackup orders, with record level of $10b order wins for FY11. Most of the new orders were for house proprietary designs, in particular its KFELS B Class jackup. For FY11, Grp delivered 40 major O&M projects.

Rev from Infrastructure Div +14% to $2.9b, with higher rev generated from the cogen power plant in SG, while rev from K-Land at $1.5b, +41% yoy, on back of completion of several projects/phases in India, China and Vietnam. Going forward, grp remains confident of prospects, and tip global demand for oil to continue rising with major oil Co’s announcing budget increases, while Day rates have been strengthening for Jack ups and Semi-Subs. Net order book of $9.35b would keep shipyards busy till 2015.

We note that grp’s fundamentals remain strong with a low net gearing of 0.17x, while Co. has declared a final div of 26c, bring FY11 total Div payout to 43c or 3.9% yield. At current price, valuation appears fair, with grp trading at 12.8x FY11P/E vs historical average of 13.8x.

Technically, orderbook quotes suggest $10.90 may cap any gains for the session, while Julpeaks around $11.30 may offer a near-term cap.

Ratings as per follow:
Citi maintains Buy with $12.00 TP
Daiwa O/w with $11.80 TP
Deutsche maintains Buy with $13.40 TP
DMG maintains Buy with $11.80 TP
JP Morgan O/w with $12.70 TP
Kim Eng maintains Buy with $12.60 TP
Macquarie maintains O/p with $11.19 TP.
Nomura maintains Buy with $11.10 TP
UOB Kay Hian maintains Buy with $11.50 TP
CIMB maintans Neutral with $10.20 TP