KepCorp: Credit Suisse maintains O/p Call with $14.60 TP. House has also initiated today on Bumi Armada with an O/p rating TP Rm4.40.
Bumi Armada (BAB) is a Msia-based international O&G services provider, and is aiming to become the world’s fourth-largest FPSO operator (by fleet size) by end- 2013. To maintain its target, believe grp would have to secure more FPSO assets. House expect Keppel to benefit from BAB’s growth into a global offshore player as the Co’s key FPSO conversion yard.
Previously, Keppel delivered the Armada Perkasa (1997), Armada Perdana (2009), and Armada Perwira (2011). House expect the Armada Prima's contract with Apache to be firmed up in 4Q, and the conversion contract with a yard to be awarded soon after. Following recent share price weakness, KepCorp is now trading at 2011 P/E of 10.7x, -1SD below historical average.
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