KepCorp

KepCorp: CIMB maintains O/p with $13.30 TP. Houseexpect Keppel to announce some contracts from Grupo R, a Mexican conglomerate soon. According to Rigzone, Keppel FELS has secured four new jack-up rig orders worth US$210m each from Grupo R. Together with the $600m contracts recently announced, the Grupo R contract will bring YTD orders to $1.8bn, significantly higher than YTD orders of $150m a year ago. Mgt also expects to see more Brazilian orders, especially given the delays from peers. Japanese shipbuilder IHI is said to be in talks to buy 30% of the troubled Brazilian yard, Estaleiro Atlantico Sul (EAS). Although the Japanese could impart some technical skills, think that the changes in stakeholders could further delay EAS’s delivery schedule. From house recent meetings with Keppel and some HK investors, house gleaned that the margins for the four jack-ups delivered YTD are “pretty good”. Add that O&M EBIT margin could reach 14.5% in FY13, trumping management’s 10-12% target due to backloaded profits from these deliveries.