Keppel Corp

Keppel Corp: Deutsche note that according to a recent article from Bloomberg, the State Oil Company of Azerbaijan Republic (SOCAR) has plans to construct four new offshore drilling rigs worth about US$4b. These rigs may be constructed over the next 7 yrs and will be used forO&G exploration in the Caspian Sea. News is positive for KEP as (1) it has an established long term working relationship with SOCAR, (2) the group is well positioned in Azerbaijan with their O&M shipyard, Caspian Shipyard Company (CSC), and (3) there is limited competition in that region. If KepCorp succeeds in winning any of these contracts, it reinforces the group's Near Market, Near Customer strategy and further establishes itself within the sector. Add that while competition is increasing from places like China, believe KEP's strategy, branding, execution strength, and engineering capabilities should continue to keep them ahead of the others. House new order win assumption for KEP in 2013 is $6.5b.