Keppel Corp 02 (Jan 15 to Dec 25)

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Rewarding focus

In its 3-year plan to unlock S$3bn-5bn of assets, we expect to see accelerated efforts in selling landbank /commercial buildings.

KEP is also embarking in O&M strategic review which could lead to it scaling down its operations to focus on RE or complete exit O&M in the next 1 year.

Longer-term ROE of 15% remains.

Reiterate Add and S$6.46 TP.

Divestment of its O&M unit above end-1H20 book value of S$1.77bn could be a catalyst.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 4849DF1BCB

[winston]

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Keppel Corporation (KEP SP) - Some questions answered

In our last report, “Temasek walks away…. for now?” on 11 August, we wondered aloud about Keppel Corp’s stock, “Value in the stock, but when can it see light?”.

Last evening’s analyst briefing seems to have partially answered this question.

Besides reaffirming the Vision 2030 strategy, management announced that it has identified assets with a total carrying value of about S$17.5b that can potentially be monetised over time and channelled towards growth initiatives, of which S$3-5b is expected to be monetised over the next three years.

In addition to its logistics business, the group is also undertaking a strategic review of its offshore and marine business, which includes both organic and inorganic options.

We have always held the view that there is value in the stock waiting to be unlocked but the question is how and when.

With management committed to undertaking steps to do this, investors will then focus on the new opportunities (including renewable energy, data centres and smart urban solutions) and its execution ability which will translate to realised returns eventually.

We maintain our SOTP-based fair value estimate of S$6.40 on the stock; actual successful monetisations of undervalued assets would provide further support to the share price. BUY.

Source: OCBC

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What’s New

Upgrade to BUY; S$5.50 TP implies 28% upside with 3-4% dividend yield

Stock has corrected c.20% post Temasek’s partial offer withdrawal, trades at 0.7x P/BV or 2SD below 5-year mean

Reaffirmation of capital recycling and launch of strategic review on O&M could restore confidence

Improving property sentiment is another catalyst

Source: DBS

https://researchwise.dbsvresearch.com/R ... =fhgajkhaa

[winston]

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At S$4.51, market cap is S$8,210mln, P/B is 0.8x and trailing 12-mth dividend yield is 3.5%.

We note that management’s 15% ROE target in the medium term suggests that Keppel at its current 0.8x P/B ratio is undervalued and there is a 27% upside potential to consensus target of $5.77.

While waiting for this to materialize, investors are paid a decent yield of 3.5%.

We maintain our BUY recommendation on Keppel Corp.

Source: Lim & Tan

[winston]

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Keppel Corp Ltd
Recommended Action: Technical SELL

Keppel Corp (SGX: BN4) strong downside has been ongoing for the past 1 year and despite the small bullish jump last week, prices still faces stiff resistance and may be visiting the low again based on the technical.

Source: Phillips

http://internetfileserver.phillip.com.s ... elCorp.pdf

[winston]

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Has Keppel Corp bottomed?

Technically, Keppel Corp is in a base formation with an increasing likelihood of an upside break.

The chart appears to have formed at least a temporary or secondary bottom, and looks ready for a rebound as current moves look like they are very much part of a common base formation chart pattern.

Volume is relatively low, as prices move sideways which is normal in base formations.

Short term indicators are rising after turning up from over sold lows.

Source: The Edge Singapore

https://www.theedgesingapore.com/capita ... p-bottomed

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Keppel O&M secures $600 mil contract in the offshore renewable energy industry

by Felicia Tan

Keppel Offshore & Marine (Keppel O&M) announced on Oct 9 that it has secured a contract worth approximately $600 million for the engineering, procurement and construction of a vessel for the offshore renewable energy industry.

The contract, which was signed with an unnamed energy company, is “in line” with Keppel Corporation’s Vision 2030, which includes “seeking opportunities in providing renewable energy solutions”, according to the group.

In an SGX filing, Keppel O&M says that it is able to provide a variety of design and construction solutions for the offshore renewable energy industry.

An example cited, is its converter stations and substations that it is currently building to support the offshore wind energy industry in the German sector of the North Sea and in Taiwan.

The contract is on progressive payment terms and is not expected to have any material impact on Keppel Corporation’s net tangible assets (NTA) and earnings per share (EPS) for the current financial year.

Source: The Edge

https://www.theedgesingapore.com/news/o ... y-industry

[winston]

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Contract wins exceed forecasts

KEP O&M has won a c.S$600m engineering, procurement and construction (EPC) contract for a vessel in the renewable energy industry.

This brings YTD orders to S$907m, ahead of our FY20F S$500m forecast.

Order book at end-2Q20 was S$3.5bn.

The stock is still trading a trough of c.0.7x CY20F, implying an unwarranted zero value for its KEP O&M business. Reiterate Add (TP: S$6.46).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 4374537298

[winston]

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We think that Keppel has been following up very closely with Keppel Vision 2030, as announced on 29 Sept, with divestments due in months, rather than in years.

In contrast, Keppel has only achieved divestments of $0.8bln – $1bln p.a. in past 5 years, compared to the S$3-$bln that it will undertake.

We like that the “asset light’ model that Keppel is heading towards and that extra cash can be redeployed into new opportunities, such as inorganic growth via merger/sales, or through organic growth i.e. building on renewables.

The recent $600mln contract won is materially higher than what it has secured as reported in 1H20 of S$300mln.

We continue to believe that Keppel remains undervalued with our sum of the parts target price of $5.63 (Bloomberg consensus target price is $5.73, not far from our own estimate).

Property earnings moving forward will be buoyed by pipeline properties amidst close to zero interest rates and abundant liquidity, and the O&M will be driven by renewables.

Infrastructure has seen improvements with data centres driving recovery.

Overarching the entire Keppel, we like that it has divested, and will continue to divest its assets to unlock further value for shareholders.

Keppel’s market cap stands at $8.3bln and currently trades at 0.8x book.

Dividend yield stands at 3.3% & net gearing is at 1.0x.

We believe that the continued monetization of assets at more than its net asset value would
help Keppel to close the valuation gap with its NAV, and we thus maintain our BUY recommendation on Keppel.

Source: Lim & Tan

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7 people charged with corruption in Keppel FELS-linked case for taking $879,900 in bribes

by Felicia Tan

Source: The edge

https://www.theedgesingapore.com/news/c ... 900-bribes