On Tuesday, OPEC’s secretary general said all OPEC producers part of the supply-cut deal are firmly determined to achieve a higher compliance rate than the 90% compliance reported for Jan.
Should compliance remain high, there is expectation that OPEC could continue to extend its oil output cuts beyond its previously agreed six month duration.
As for Keppel, it is less likely that the group will continue with impairments unless there is a sudden drop in oil prices to US$30 range or below, after reporting significant impairments in its FY16 results.
Keppel has also cut its overheads, achieving cost savings of about $150 million year-on-year. The group has mothballed two overseas yards and is in the process of closing three yards in Singapore.
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Meanwhile the property division posted net profit of $620 million in 2016. Looking ahead, the group still expects healthy sales figures for China and Vietnam.
“We value Keppel’s O&M business at 1x P/B, which is not demanding... We also ascribe a 1x P/B to the group’s property segment,” says OCBC.
Shares of Keppel are up 17 cents at $6.74.
