The renewable energy (RE) contract win by Keppel Offshore & Marine (Keppel O&M) – the subsidiary of Keppel Corp – is likely a boost for the latter, according to CGS-CIMB Research.

See also: Has Keppel Corp bottomed?

On Oct 9, Keppel announced that Keppel O&M secured a $600 million contract for the engineering, procurement and construction of a vessel for the offshore renewable energy (RE) industry.

CGS-CIMB says it is “positive” that the company’s year-to-date orders of $907 million are ahead of its forecast of between $500 million to $1 billion for FY20-FY21.

“We maintain our assumptions pending further discussion with the management,” CGS-CIMB head of research Lim Siew Khee writes in a note dated Oct 9.

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According to the brokerage, this contract win proves that Keppel is seeing “traction” in its focus to become a provider of RE solutions.

The company’s current projects include building converter stations and substations to support the offshore wind energy industry in the German sector of the North Sea and in Taiwan, notes CGS-CIMB.

The company also has a stake in Blue Tern, which is one of the world’s largest and most advanced multipurpose offshore wind turbine installers for the UK North Sea, adds the brokerage.

CGS-CIMB has kept its “add” rating for the stock with an unchanged target price of $6.46.

As at 2.10 pm, Keppel was up 5 cents or 1.1% at $4.54 with 3.9 million shares changed hands.