Keppel's 2016 O&M earnings could crash 80% from 2014 level

Another 30% slash is expected next year.

UOBKayHian cautions that Keppel Corp., may continue to face earnings headwinds at its O&M division in the year ahead.

The research house's analysis of Keppel's orderbook shows that the bulk of 2016 O&M earnings continue to be running off its 2014 contracts win of S$5.5b and likely to be fully recognised by 1H17.

Unless more orders can be secured, UOBKayHian projects turnover could potentially decline by another 50%.

It notes that 2016 O&M earnings could decline 80% from 2014 and by another 30% in 2017.

As a result, it also expects dividend to remain under pressure as O&M earnings falter.

"O&M was the key cash flow generator for Keppel, accounting for as much as 70% of the group’s EBITDA over 2010-14," it said.

 As of 9M16, the unit’s EBITDA was comparable to the property division’s at 43%.