The 2Q FY09 results were above our estimates, with key surprises being the revenue for the Offshore & Marine (O&M) and Property segments. We have raised our FY09 net-earnings forecast by 10.6%. Our FY10 and FY11 net-profit forecasts are unchanged and are still the lowest among the Bloomberg- consensus forecasts.
The company now has S$7.7bn in the O&M orderbook through to FY12. To put this into perspective, the O&M segment has 310 days of orderbook, based on its 2Q FY09 pace of revenue and contract wins. In other words, we think a significant O&M revenue deceleration through to FY11 is imminent, unless the company starts winning numerous, high-value contracts in 2H FY09.
We have a six-month sum-of-the-parts-based target price of S$5.44, which reflects our cautiousness towards the rig-building sector. We would not be surprised if Keppel Corp’s share price continued to rise if equity indices globally continued to rise. However, we feel investors should avoid the stock of a company that has such potential to disappointment in its FY10-11 earnings. We maintain our 4 (Underperform) rating.
Sponsored Links
No comments:
Post a Comment