Why most Keppel Corp new orders will be for jackup rigs

2013 net orderbook likely reach S$13.8b.

The estimates from OSK-DMG came as Keppel Corporation's offshore marine division announced a $206m order for a KFELS B Class jackup rig from Uruguay-based Pardan Holding, which the research firm took as another sign of the ongoing replacement cyle leading offshore players to keep on ordering jackup rigs.

Here's the complete event analysis from from OSK-DMG:

Secures USD206m jackup order. Keppel O&M has secured a newbuild jackup rig order for USD206m from Uruguay-based Parden Holding. The rig will be built based on KFELS B Class design and customised to Parden’s requirements. Delivery is scheduled for 4Q2015 for operations in Mexico. Including this order, various customers have placed orders for nine KFELS jackup rigs, to be used in the Mexican market.

No change in price point. The selling price of this KFELS B Class rig is similar to that locked in by Grupo R’s order last month, but slightly lower than the USD210m paid by Pemex in December 2012. While the KFELS remains an industry-leading design favoured by many clients, overseas competition has limited the scope for price hikes.

SGD13.8bn-strong net orderbook. The latest contract lifted the company’s YTD new orders to SGD3.75bn, which is within our forecast of SGD6bn. We expect jackup rigs to make up the majority of new orders as the replacement cycle remains intact. We estimate KEP’s net orderbook at around SGD13.8bn.

NEUTRAL with SGD11.23 TP. We lower our SOP-derived TP to SGD11.23 from SGD11.44 previously to reflect the company’s recent dividend distribution.

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