I sold Keppel Corp at $6.16 in Jan this year, expecting its Offshore & Marine (O&M) segment to start showing losses. Yet, for 3 consecutive quarters, Keppel O&M has surprised me with either breakeven or a small net profit of $1M. How did it achieve this feat, and will it continue to at least break even for the coming quarters?
The answers can be partially found in Keppel O&M’s order books. Fig. 1 below shows the order book based on the financial results for Q3 FY2017.
Fig. 1: Keppel O&M Delivery Order Book for Q3 FY2017
As shown in the figure above, Keppel O&M has been completing the projects ahead of time. For deliveries in FY2018, the gross contract value is $1,052M, but it has completed 85% of the contracts, leaving only $156M yet to be completed. Similarly, for deliveries in FY2019, it has completed 78% of the gross …