KepCorp

KepCorp: FY12 results was in-line, with rev at $14.0b, +39% yoy, while net profit at $1.91b, +28% yoy after excluding revaluation gains and one-offs. Keppel proposed final dividend of 27 cts/sh, bringing full-year cash dividends to 45 cts/sh. In addition, it proposed dividend in specie of Keppel REIT units equivalent to 27.4c/shares. This brings total distribution to 72.4c/sh, implying a yield of 6.4%. 4Q12 operating margin for O&M sector was flat at 12.8% (12.9% in 3Q12) and overall full-year margin came up to 13.5%. Despite conservative management guidance, market watchers expect productivity and efficiency gains to contribute to higher operating margin of 14.2% in FY13F as Keppel O&M would deliver a record number of 22 newbuild units in the year Deutsche believe that Kepcorp took sizeable provisions (we estimate >S$100m) in infrastructure last year due to its record earnings. Due to the provisions that have been made, the division should start 2013 with a cleaner slate and house expect a strong pickup in earnings this year. Overall, KEP’s yards should be busy in 2013 with 22 newbuild units scheduled for delivery. Twenty of the units are jackup rigs and several of these are of KEP’s proprietary KFELS B Class design. With repeat construction of the same design, expect greater efficiency as the rigs are constructed. Ratings as follow: CIMB maintains O/p with $13.30 TP Deutsche maintains Buy with $13.50 TP Maybank-KE maintains Buy with $12.80 TP UOB Kay Hian maintains Buy with $12.70 TP