Keppel Corp

Keppel Corp: Secured a contract to build a jackup rig worth US$206m from repeat customer Grupo R, a Mexican drilling company. Delivery is scheduled for 4Q15. The new rig order is priced in line with the US$205m average price of the previous four similar rigs that Keppel is building for Grupo R. With this new contract, Keppel currently has on order nine KFELS B Class jackup rigs from Mexican customers. The growing activity in the region is underpinned by a positive backdrop of increasing E&P spending, driven by govt initiatives and an aging drilling fleet. PEMEX, the Mexican national oil company has stated its aim to increase pdtn with plans to add between 8 -12 offshore platforms to its drilling fleet, and recently unveiled invmt plans of US$25.3b for 2013, of which US$20b will be targeted at upstream activities. Keppel’s has achieved ytd order wins of ~$3.7b, on track to meet the street’s estimate of $5.5 – 6.5b for the full year. Revenue visibility is backed by the strong current orderbook of ~$15.1b, with deliveries extending to 2019. Nomura keeps at Buy with TP $13.20, notes the stock is supported by an attractive FY13e yield of 4.2%.