Keppel Corp : S$10.64 BUY (TP: S$12.76)
A true conglomerate
We re-initiate coverage on Keppel Corp with a BUY rating. We like Keppel
for its diversified portfolio that spans across Offshore & Marine,
Property, Infrastructure and Investments business segments. The diverse
business mix should protect its earnings from a drastic slowdown in any one
market and reduce overall earnings volatility. While we still believe that
Keppel would continue to enjoy strong earnings from Offshore & Marine in
this favourable oil and gas sector climate, the Infrastructure arm is
slated to be the next defensive recurring income stream in the years to
come. We value Keppel based on sum-of-the-parts valuation metric, deriving
a target price of S$12.76. This implies a forward FY08F PE of 19.5x, in
line with the regional conglomerate peers.
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