Keppel Corporation - Order book to decline by end-13

Keppel Corporation - Order book to decline by end-13 (18/04)  
Offshore & marine’s operating margin of 14% was in line with our expectations, albeit better than management’s guidance. We believe its order book and earnings, both of which are declining, would be unlikely share price drivers in the near-term.  1Q13 net profit came in slightly below our and consensus expectations at about 22% of our full-year forecast. We cut our FY13-15 EPS by 3-5% on lower revenue for O&M. Our lower target price is still based on RNAV, but we cut O&M’s P/E to 13x, a 10% discount to the mid-cycle P/E of 15x, in view of declining earnings in FY14-15. Downgrade to Neutral from Outperform.