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Keppel Corporation - Top drillers prefer Singapore yards
We are convinced that tier-1 drillers still prefer to order their jack-up rigs from the Singapore yards, as testified by Ensco's latest order of a Keppel FELS B Class Bigfoot for 2015 delivery. We maintain our Outperform rating on Keppel Corp, our top big-cap sector pick.
According to Ensco, continued strong demand from customers has spurred the order of rig from Keppel. The construction cost is expected to be approximately US$225m. This brings Keppel's YTD orders to S$1.87bn or 34% of our S$5.5bn target. No change to EPS and target price, still based on RNAV. Stronger orders and margins are the key catalysts.
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