Keppel Corporation

Broker: OCBC Investment Research

Call: Buy

Target price: $7.40

Keppel Fels has entered into a heads of agreement with Borr Drilling which involves moving the construction contracts for five jack-up rigs being built for Transocean to Borr Drilling.

The price for each rig is US$216 million (S$302 million), compared with the original price of US$219 million. This is proof that well-regarded products still command good pricing.

Borr Drilling will also make a down payment of US$275 million, such that Keppel would have obtained cash worth about half of the total contract value for the five units with the Borr payment.

We are starting to see more instances of opportunistic purchases of rigs and expect that buying interest would be higher for best-in-class assets such as those with the Keppel and SembMarine brands.

China Jinjiang Environment

Broker: CIMB Research

Call: Buy

Target price: $1.10

China Jinjiang (CJE) is an overlooked waste-to-energy leader in China.

CJE is trading at price-to-earnings of 7.3 times, a 43 per cent discount to its environmental peers listed in Singapore and Hong Kong.

We think this is unjustified, given CJE's longer operating history (over 18 years), large operating capacity and large projects under development.

The National Development and Reform Commission, a macroeconomic management agency, wants to raise China's incineration capacity by 36 per cent from end-2015 to end-2020. We believe there will be plenty of new investment opportunities in the market.