Kepcorp

Kepcorp: CKSA maintains O/p with $12.90 TP. House would be looking out for stabilisation/recovery in O&M margins as well as improvement in FCF when Keppel reports on 18th Oct after market. O&M margins disappointed in 2Q12 (declining to 13.2%) in spite of write backs. Note, 1H12 numbers were boosted (65% of our FY12 forecast) by recognition of property sales at “Reflections” which don’t expect to be repeated. Keppel Land and KREIT 3Q12 results are expected to be in line. Keppel remains house top picks in SG market offering shadow defensive qualities.