Keppel Limited

[kayhian]

Source: OCBC MarketPulse

Keppel Corporation: Continues to deliver

Keppel Corp reported a 3.3% YoY rise in revenue to S$3.18b and a 17.1% increase in net profit to S$406.0m in 2Q14, such that 1H14 net profit met 49% of our full year estimates, in line with expectations. Operating margin in the O&M division remained strong in the quarter, at 14.7% in 2Q14 vs. 14.2% in 2Q13. Though the deepwater market has softened, management sees the jack-up market as resilient, for which the group is still receiving healthy enquiries. Meanwhile, the weaker property market is opening prospects for the group, while no additional provisions were made in the infrastructure division in 1H14. KEP has secured orders of about S$3.2b in 1H14, accounting for close to half of our full-year new order win estimate, and bringing its net order book to S$14.1b (as at 30 Jun) with visibility into 2019. Maintain BUY with higher fair value estimate of S$12.31 (prev S$12.25); an interim dividend of S$0.12/share has also been declared. (Low Pei Han)