Keppel Corp

Keppel Corp: Keppel Corp has won a timely contract valued at over US$100m, to build one of the world’s largest land drilling rigs for a major operator. Scheduled for delivery in mid-2016, the rig will be capable of operating in harsh conditions. Separately, we note that the group recently initiated its share buy-back program on 10th Dec, and has to date purchased a total of 5.9m shares at between $7.91 and $8.54 each, suggesting the group's confidence in its longer term outlook. The rig builder is authorised to purchase a max of 90.8m shares via share buy-backs. While the latest contract is not expected to have a material impact on the net tangible assets or earnings per shares on Keppel Corp for FY14, it brings the group’s orderbook to ~$11b, with deliveries extending into 2019. At the current price, Keppel Corp trades at 10.3x forward P/E versus its historical 10 year average of 12.4x. Overall, Maybank-KE rates Keppel Corp as a Hold, with TP $9.00, preferring to await further clarity on oil price outlook, before positioning for any entry. Technically, the house tips key support levels at $8.51 followed by $7.53 and key resistance levels at $8.53 and $9.63.