Keppel Corp

Keppel Corp: 1Q14 net profit were in-line despite a dip of 5.1% y/y to $338.7m, mainly due to one-offs in 1Q13. Revenue climbed 8.6% to $3b, with increases were from Offshore and Marine (+13%) due to higher recognition of ongoing projects, and from Property segment (+10%) mainly for properties sold in China, offset by Singapore. Bottomline was weighed particularly by a 32% reduction in share of profits from associated companies, and a 35% increase in taxation, mainly due to one-offs last year, being the reversal of provision due to the sale of the power barge and Property’s write-back of tax provision in. Otherwise, net profit would have been largely flat y/y. O&M EBIT margins were a healthy 14.6% (1Q13:14.1%). Keppel O&M secured new orders worth $1.9b in 1Q14 (Deutsche estimates ($7b) and had a record high net order book of $14.4b with deliveries up to 2019. Contract win environment would remain robust as 1) strong replacement cycle would continue to hold up the jackup rig market, 2) weakness in the deepwater floaters market is temporary as the long-term demand dynamics remain strong, and 3) the FPSO market presents another area of growth opportunity. Latest broker ratings as follows: Maybank KE maintains Buy with TP $12.48 CLSA downgrades from Buy to O/PF with TP reduced from $12.40 to $12.28 Deutsche maintains Buy with TP $12.20 Credit Suisse maintains O/PF with TP $12.70 Philip Securities maintains Neutral with TP $11.35