Nomura raises Keppel Corp’s (BN4.SG) target to $15.00 from $13.10, reiterates its Buy rating after factoring in strong FY10 earnings (7.0% ahead of the house’s estimate) plus the recent run-up in jack-up rig contracts. 

“In 1Q11, Keppel has secured roughly US$800 million ($1.03 billion) in new contracts and we expect more to come on a strong jack-up rig renewal trend.” The house says the strong order momentum reaffirms its investment thesis on the jack-up replacement cycle in a market which is beginning to show differentiation in day-rates, and utilisation between old and new high-spec rigs. 

Nomura lifts its FY11F/FY12F EPS forecasts by 5.0%/10%; “While shares have outperformed the STI by 9.0% in the past month, valuation does not appear stretched (near five-year mean P/BV) and we expect further new order momentum to drive share price performance with the Petrobras orders yet to play out.” 

 

Keppel is down 2.3% at $11.74.