Suspicious transactions a big negative for Keppel

SINGAPORE (Oct 10): Daiwa Capital Markets is maintaining a “hold” call with a higher target price of $5.72 for Keppel Corporation, citing negative impact from the Oct 3 announcement on suspicious transactions associated with the company’s former agent in Brazil.

Although Keppel has emphasised its zero-tolerance stand against illegal activity, analyst Royston Tan highlighted that should any member of the management be found guilty, the negative impact on Keppel’s image, as well as uncertainty around the existing contracts with Sete remains a risk.

Meanwhile, Tan notes that Keppel has secured contracts to build two dual-fuel diesel LNG tugs as well as a US$26.7 million ($36.7 million) contract for technology solutions for the world’s largest waste-to-energy facility in China, according to a note published on Oct 7.

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