Keppel Corp

Keppel Corp: announces letter of intent (LOI) with Sete Brasil (ie. the Petrobras JV) for 5 additional semisub drilling rigs based on KEP’s proprietary DSS38E design.
The total value of the contracts, if successfully executed, will be approx US$4.1b.
This works out to US$824m per semisub, above the US$809m price tag of KEP’s first similar semisub signed with Sete Brasil back in Dec ’11.

Expect positive market reaction to this news.
While this Sete Brasil order was known already, a number of analysts had not factored the order into their forecasts due to uncertainty in timing/ price. The LOI serves as a “confirmation” of the news, and would be a strong share price catalyst.

This is the largest single rig order ever won by a Spore yard, and brings KEP’s ytd orderwins to S$6.2b, vs S$10b of orders secured in the whole of last year.
Current orderbook stands at approx S$14.2b.
The Street currently forecasts KEP’s FY12E orderwins of ~S$8b, though expect this number to be revised upward.

Deutsche maintains Buy with TP $13.40.
Nomura maintains Buy with TP $13.80.

KEP's peer, SMM may rise today as well, on sentiment boost as well as expectations for SMM to secure its own orders from Sete Brasil "soon".