RHB estimates O&M’s current orderbook to stand at $3.7 billion presently. “We expect it to win about $500 million in contracts this year,” says RHB.
Keppel is also focusing on expanding its stable recurring income from its property, infrastructure and investment divisions, says RHB. These sources of income would complement the earnings that are based on projects in its O&M unit. In FY16, 40% of Keppel’s net profit came from a recurring base.
With outlook of the oil and gas market improving, RHB expects numbers from Keppel’s O&M segment to increase, as soon as development capex starts to trickle in soon.
Although the O&M unit’s outlook is expected to stay soft over the near term, RHB believes that Keppel focusing on its non-drilling solutions and specialised vessels is a wise move, as proven by its contract wins.
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Shares of Keppel are trading at $6.48.