Wednesday, June 05, 2013

Keppel gains, STI fall

Singapore shares weakened, while the world’s biggest offshore oil rig builder Keppel Corporation gained on news that it won an US$800 million ($999 million) rig order from Azerbaijan.

The Straits Times Index dropped 0.7% to 3,265.44, while the MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%.

Shares of Keppel Corp rose as much as 1% to $10.68, after the company announced that it won a contract from Caspian Drilling Company, a subsidiary of the State Oil Company of Azerbaijan Republic, to build a semisubmersible drilling rig, worth about $800 million.

 “This contract will lift Keppel’s year-to-date wins to $2.4 billion, forming 41% of our full year assumption of $6 billion,” said DBS Group Research, keeping an unchanged “buy” rating and target price of $13.00. Other brokerages had a bullish outlook on Keppel Corp.

 “With Keppel’s seven jack-up orders to date, all based on its KFELS B class jackup designs, we believe the outlook for margins in 2014 continues to improve,” said Barclays analysts, keeping Keppel as its top pick in the rig-building space.

The oil and gas sector index gained 0.4% on Wednesday, down 1% so far this year, lagging behind the benchmark index’s 3% rise.

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