KepCorp: Net income rose 12% yoy to $1.4b generally beating estimates. Improved contributions came from continued growth in O&M margins from 12% in FY09 to 20% in FY10 and property arm which was up 31%yoy at $625m. Infrastructure was down 38% due to $136m in provisions made for Qatar projects which have met cost overruns and delays...
Co ended FY10 with new rig orders of $3.2b with order book at est $4.6b.Going forward, O&M margins may not be as profitable due to relatively lower price of newbuilds and increased steel costs. Demand for rigs likely to remain strong due to replacement of current low spec rigs est at 80% of rig fleet though Gulf of Mexico rig utilization rates are waning on safety concerns…
Dividend of $0.26/sh and bonus issue of 1 share for 10 existing share to be paid out. Houses which are positive, maintaining Buy calls are CS, ups TP to $14.00 from $13.50, Deutsche TP $14.20, JPM TP $14.10, Daiwa TP $12.70, DMG ups TP to $13.00 from $12.00. Citi maintains Buy as well.
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