Keppel Corp

Keppel Corp: says its US$1.2b contract with Ukraine’s Naftogaz to build 2 semi-sub drilling rigs (announced Dec ’12) will not be taking effect, as certain conditions within the timeline set weren’t met. As such, UOBK lowers 2013 contract win assumptions for KEP from $6.5b to $5b (2012:$9.9b). This compares with KEP’s ytd order wins worth $572m. The house trims TP by 1.2% to $12.55, but maintains Buy, on the back of upcoming project tenders sought by the industry. Given the recent strength in KEP share price (has been breaking new 52 wk highs), investors may use the negative news as an excuse to take some profits off the table. However, longer term, CIMB retains KEP as its top pick in the big cap O&M sector. Keeps at Outperform with unchg TP $13.30. The stock trades at 9.5x P/E, 2.3x P/B.