Keppel Corp

Keppel Corp: extends recent order momentum; wins US$1b (S$1.25b) order for 2 harsh environment jackups (Gusto CJ70), that comes with 1 additional option (unknown jackup specs). The rigs, expected to be delivered in 4Q13 and 3Q14 rptively, are especially suited for operation in the North Sea...

Ytd, Keppel has garnered new orders of ~S$3.2b, and has options to build another 12 rigs worth about the same amount. At current run rates, Keppel appears on track to hit Street forecasts for FY11 new orders of S$5.1 - 7.0 b. This compares to the record S$7.4b worth of orders that Keppel won in FY07...

Also, the latest order reverts to the traditional milestone payments instead of the recent 20/80 terms. The improving yard payment terms may be a sign of potential rig pricing hikes. Meanwhile, analyst channel checks indicate more orders ahead for Keppel, though the pace of order wins may slow in the near-term. Recall Maersk previously indicated it aims to order a new rig every 6mths, and has a long term target to double its fleet from the current 26 rigs...

The Street unanimously reiterates Buy call. Goldman raises TP to $14 from $13.50.