Keppel Corp

Keppel Corp: Clinched first contract for the year but nothing to shout about
- First contract win for 2016 worth 500m Brazilian reais ($190m), by repeat customer Modec Group.
- While a contract win is generally viewed as a positive event, investors should note that the contract value makes up only 11% of Maybank KE's full-year new order forecast of $1.6b, which is already a significant drop from $5.5b in 2015 and record $10b in 2011.
- House is not hopeful of new drilling rig orders over the next two years, which will result in the depletion of Keppel's current orderbook of $9b with weak replenishments, while existing contracts face risk of deferrals and cancellations.
- Maybank KE maintains its Sell rating with TP of $4.42.