Keppel T&T

Keppel T&T: CIMB describes Keppel T&T as going through a temporary pinch and noted that 3Q13 operating margins fell to a 7-quarter low of 10.5%, with logistics and data centre segments affected by higher operating costs. CIMB reckons that margins will stay depressed until the opening of new facilities in FY14-15, as staff costs and building costs are incurred before operating earnings are generated. On the logistics side, the 4 new warehouses are of larger scale which may mean a longer period of depressed margins. On the data centre segment, margins are likely to improve as Keppel Datahub 2 generates revenue in 1H14. At 10.6x rolling forward P/E, 1.s.d and below its historical mean of 11.7x, CIMB reckons valuations are undemanding given potential earnings from upcoming facilities. On that note, CIMB maintains O/PF with a raised TP: $1.92 (prev TP: $1.65)