Kepcorp (DBS)

KepCorp: DBSV note that KepCorp's latest contracts affirm house views for a return of semisub orders. These orders support our view for a return of semisub orders which had been lacking over the 2009-2011 period, supported by 1) sustained high global fleet utilisation rates, 2) a declining orderbook, and 3) a highly aged fleet (~61% of fleet is >25 years old). Indeed, excluding the Petrobras semisub orders, these latest orders are the first newbuild semisubmersible drilling rigs ordered from KEP since August 2008. Overall, house maintain buy noting that this batch of orders is a major boost to KEP’s FY12 YTD order wins (ex-Petrobras), which now stands at $4.2bn, vs. our assumption of $5.0bn for the full yr. Including Petrobras orders, YTD order wins stand at $10.5bn vs. house $11.3bn full year assumption.