Keppel Corp

Keppel Corp: announced the formation of Ocean Mineral Singapore (OMS), to explore for polymetallic nodules several km beneath the ocean’s surface. OMS is 78% owned by Keppel, with UK Seabed Resources (subsidiary of Lockheed Martin) and Singapore-based private invmt co Lion City Capital Partners, as minority shareholders. OMS has applied to the International Seabed Authority (ISA) for its first seabed exploration license, which will be considered in July. The ISA administers seabed mineral harvesting beyond nations’ territorial waters. The project to mine subsea minerals is still at a preliminary stage, pending the ISA approval and feasibility studies. Given the limited details, it is too early to judge the viability of this project. While it could portend to be an exciting opportunity over the mid-to-longer term, it also comes with higher operational risks. For now, DBSV maintains Buy with TP $13, continues to favor KEP as the preferred O&M pick, in view of its solid execution track record, global yard network, world class proprietary designs and R&D capability. KEP shares are up 1.3% at $11.34, outperforming SMM's 1.4% decline.