Keppel Corp posted a stellar set of financial results for its financial year ending 31 December 2009, despite last year’s tumultuous events.

Full year net profit rose 48%, to a group record of $1.6b, boosted mainly by the $322m gains from the disposal of Singapore Petroleum Company in the middle of 2009. Excluding exceptional items, bottom line grew 15.3% to $1.2b.

The conglomerate posted $12.2b in revenue for FY09, representing a 3.7% increase on year. Although contributions from its O&M segment declined 3%, revenue from Keppel’s property division increased 59% on higher revenue recognition of residential properties, while turnover from its infrastructure division grew 9% boosted by higher value EPC contracts undertaken in the Middle-East.

Keppel proposed a final dividend of $0.23 per share, along with one unit of K-Green Trust for every 5 ordinary shares held in the group. K-Green Trust will comprise Senoko Waste-to-Energy (WTE) plant, Tuas WTE plant and Ulu Pandan NEWater plant as its assets.

Under Promise, Over Deliver?

Keppel O&M had in FY09 completed a record 14 rigs, 6 conversions/upgrade/completion jobs and 14 specialised vessels. Most recently, the group’s JV with J. Ray McDermott announced that it had signed a US$1b contract to build and operate the P-61 Tension Leg Wellhead Platform (TLWP) for a Petrobras-Chevron JV.

Keppel had also announced in January that it secured a contract to build Saudi Aramco’s first mobile offshore drilling rig as well as delivered the world’s first North Sea-compliant floatel.

Despite the conglomerate’s shining performance, Keppel’s CEO Choo Chiau Beng was not carried away by 2009 and guided for a sombre 2010. He said that while long term prospects for its O&M division remain good, it was unlikely that the group will see a return to the high volume of newbuild rig orders of the past 5 years.

He was however much more sanguine about the outlook for its property division. The focus, Choo said, will be on developing more properties in regional markets such as China, India, Vietnam and Indonesia, and concentrating on these markets that have continued to show strong and sustained growth.

Morgan Stanley is bullish on the stock having upgraded it to Overweight from Equal-weight while raising target price to $9.35 from $8.30. The foreign brokerage says Keppel Corp’s good order momentum can continue into 2010, and is well positioned to win contracts in Brazil booming energy sector.

DnB NOR, another foreign brokerage, also upgraded Keppel to Hold from Sell, with target price raised to $8.50 from $7.50. DnB NOR says Keppel is “a bargain compared to SembCorp Marine” and that “K-Green Trust is positive for Keppel’s valuation as it allows Keppel to optimise returns through increasing liquidity for its infrastructure assets.”