Keppel Corp’s recent contract wins amounting to $200 million could enable its offshore and marine (O&M) business to return to the black next year, according to CGS-CIMB Research.

Coupled with its low valuation, shares of the company are an opportunity to accumulate now, it says.

On Sept 22, Keppel announced that its subsidiary Keppel Offshore & Marine (Keppel O&M) secured a contract to build a high-specification trailing suction hopper dredger.

Keppel O&M also bagged a contract for the conversion of a liquefied natural gas (LNG) carrier into a floating storage and regasification unit (FRSU).

CGS-CIMB says these contract wins represent Keppel’s ninth newbuild dredger and its fifth FRSU conversion to-date.

It notes that the company’s cheap valuation is currently lower than when it traded during the previous oil crisis in 2006 and the global financial crisis in 2009.

“At the current share price, the market is heavily discounting its O&M business to zero value,” CGS-CIMB head of research Lim Siew Khee writes in a note dated Sept 22.

“We think this is unwarranted as the O&M order book of $3.5 billion is in progress and should be able to guide the yard into profitability in 2021,” she adds.

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

As at 9.24 am, Keppel was down 2 cents or 0.5% at $4.10 with 433,700 shares changed hands.