KepCorp

KepCorp: DBSV maintains Buy with $13.00 TP. House note that 1Q13 results slightly below; O&M margins seem to have bottomed out. Stripping out impairment charges, fair value and divestment gains, core net profit was S$331m (-56% y-o-y), making up 21% of house and consensus’ full year estimates. O&M orderbook drawdown appears slower than expected probably due to timing of recognition of projects. However, we are cheered by the O&M operating margins, which expanded for a second consecutive quarter to 14.1%, from the trough of 12.9% in 3Q12. House believe margins could revert to 15% by FY14 on productivity gains and a pick up in contribution from higher-margin conversion projects.