Brokers' take: Analysts fret over Keppel Corp's orderbook

KEPPEL Corporation, which announced its results on Thursday, faces risk in a weakening orderbook, analysts said on Friday.

It could also see further impact from potential distressed asset sales in the second half of the year by rig speculators and Chinese yards, Nomura said in a report on Friday.

"Keppel is the top global yard for newbuilding of jackup rig. Yet, this could be its Achilles' heel as we expect global jackup rig orders to halve year-on-year in 2015 on industry oversupply," said Nomura, which kept its "reduce" rating on the stock. "This will result in orderbook replenishment risk to Keppel, which we believe is underestimated by the market."

The conglomerate on Thursday said it will shift the focus for its offshore business to areas beyond drilling as rig orders dry up. Net profit for the three months to March 31 rose 6.4 per cent to S$360.2 million from the previous year, lifted mainly by gains from the sale of equity investments. Revenue slid 6.1 per cent to S$2.81 billion in the same period.

Separately, OCBC Investment Research said eight rigs have been deferred due to customer requests, from which Keppel Corp will obtain some compensation. To date, Keppel's new order wins totalled just about S$500 million, with OCBC lowering its new order win assumptions, it said.

"Meanwhile, the Brazil situation remains fluid as Sete Brasil seeks a solution to its financial woes, and payments remain suspended," the brokerage added.

Shares of Keppel fell four Singapore cents to S$9.40.