Keppel Corporation - OCBC Investment 2017-03-20: Pay day from Keppel T&T?

KEPPEL CORPORATION LIMITED BN4.SI

Keppel Corporation - Pay day from Keppel T&T?

Keppel T&T announced last Friday that SPH, Axiata Group and itself are currently undertaking a strategic review in respect of their shareholdings in M1 Ltd which may or may not lead to a transaction.
Keppel Corp has a 79.37% stake in Keppel T&T, which holds 19.23% of M1.

In our sum-of-parts valuation, Keppel T&T accounts for about 5% of Keppel Corp’s value, and we do not expect a significant impact on Keppel Corp’s fair value estimate of S$7.40 should an M1 sale materialise.
The impact would be more greatly felt at the Keppel T&T level, and the market may eye any potential special dividend, given that
1. Keppel T&T’s stake in M1 is worth ~S$390m at current prices, and
2. Keppel T&T also announced on the same day that it will sell its entire 10% interest in Asia Airfreight Terminal Company for HK$250m (~S$45m).
However, a special dividend would be beneficial to Keppel Corp in terms of cashflows.
Maintain BUY with S$7.40 fair value estimate on Keppel Corp.

Low Pei Han CFA OCBC Investment | http://www.ocbcresearch.com/ 2017-03-20

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 7.400 Same 7.400