Dbs vicker.

Tgt = 1000 today : )

3Q10 results beat expectations on strong O&M margins, property contributions, offsetting decline from infrastructure 
Expect return of jack ups and semi-sub orders, on higher E&P spending next year
Raise net earnings to account for higher expected order wins. TP raised to $11.30
3Q10 beat expectations, net earnings for 9 months accounted for 83% of our full year forecasts. Offshore and Marine’s sterling results – net profit up 15% yoy despite a 31% decline in sales were achieved on exceptional margins – EBIT maintained at 19%. The trend is set to continue for 4Q10, as it works off higher margin contracts from existing order books. This more than offset the 40% decline in net earnings contributions from Infrastructure, a result of cost overrun in environmental projects at Qatar and Doha. Property remained a key earnings growth driver, net profits rising 48% yoy with contributions from sales of residential units at Reflections at the Bay, Marina Bay Suites and China. .

The tide has turned in favour of Singapore yards, with active enquiries from oil drillers for premium jack-ups and semi-submersibles, and higher E&P spending next year. Petrobras provides another catalyst for optimism, the contracts, if awarded, could potentially double its order book, currently at a low $4.1b.

We have raised our assumed order wins from $2.5b to S$3b for 2010, vs S$2bn secured YTD. For 2011, we expect the group to win total new orders of S$11b (including S$6.5b from Petrobras). Keppel announced this morning that it has an LOI with Mermaid Maritime to build two jack-ups worth US$360m, includingh two more options, raising YTD order wins to S$2.5b once the contracts are confirmed. With the yard’s low book to bill ratio, we expect project deliveries to shorten for non-Petrobras orders to be won over the next 6 months. As a result, we have raised net earnings(pre-EI gains) forecasts for 2010 to 2012 by 5% to 7%. Our SOTP value is raised to $11.30 based on FY11 earnings