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