MARKET TALK - Keppel's gains have lagged SembMarine YTD, Time to Revisit Stock

0749 GMT (8 March) [Dow Jones] STOCK CALL: Potential orders from Petrobras have been priced into Singapore rigbuilders, with significant orders from other sources needed to drive a further re-rating of the sector stocks, Credit Suisse says. Based on strong tendering activity for semisubmersible drilling rigs and harsh environmental jackups to be used in the Gulf of Mexico and the North Sea, Keppel (BN4.SG) appears to be bidding for a larger number of non-Petrobras tenders relative to SembMarine (S51.SG) and Cosco Corp. (F83.SG), the house says. It notes Keppel’s gains have lagged SembMarine year-to-date and it believes it’s time to revisit the stock. “We expect the stock to catch up on award of non-Petrobras contracts against low market expectations of about S$6 billion in 2012. Keppel’s O&M stub P/E valuation of 11X looks attractive against its historical average (14X) and SembMarine (15X),” says CS. It rates Keppel at Outperform, with S$12.40 target. The stock is down 0.2% at S$10.82.

[I]- Leslie Shaffer, Dow Jones & Company[/I]