Numbers in line

Keppel Corporation reported a strong set of FY07 numbers that were in line
with expectations. Revenue rose 37% to over S$10bn for the first time
while net profit of S$1.1bn set a new record.


Offshore has legs

The offshore and marine division led the way with a 17% rise in profit to
S$522mn. Management revealed the figure could have been higher if not for
provisions from an earlier Brazilian rig contract. Margins were also
impacted but should improve as the latest contracts have included clauses
for cost escalation. Management remains optimistic on the outlook for
2008.


Property full steam ahead

Despite the current slowdown, management remains optimistic on the long
term prospects of the property division. The Marina Bay Financial Centre
has already secured over 50% commitment two years ahead of its completion
on high rentals. Meanwhile, the group will be launching over 18,000 homes
in the region during 2008-09.


Other divisions also doing well

The infrastructure arm has turned the corner with the commencement of
water, cogen and waste projects in Singapore and Qatar. Keppel's
investment in SPC also continues to do well, with regional expansion
significantly increasing the group's production baseload in Oyong and
Bohai Bay during 2H07.


Maintain Buy

Valuations are attractive after the recent correction. We expect Keppel to
have another record year in 2008. 2008 P/E of about 15x is close to the
lows achieved two years ago. Maintain Buy.