Keppel Corp: Announced that it has secured shipbuilding contracts worth $140m in Brazil. The first contract entails building 6 tugboats for SMIT Rebras, while 2nd contract involves constructing a PSV for Guanabara Navegacao. This is the first PSV constructed under business model to build OSVs in anticipation of demand in Brazil, and such vessels will be offered for charter or sale upon completion…..
Contract places Kep’s Orderbook at an estimated whooping US$7.4b, with order wins YTD at US$5.76b, underpinning earnings till 2014. While above contracts are not expected to have any material impact on NTA and EPS for grp in FY11, we note that it could mark a start of future avenue, for grp to compete or gain market share in the Brazilian OSV mkts. Other notable SGX listed yards competing in the same mkt would include STX OSV……
We note that majority of street remains bullish on grp’s prospects, with a mean TP of $13.04. At current price, valuations appear relatively compelling, with grp trading at 11.1x FY12E P/E vs historical average of 14x.
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