Keppel Corporation - RHB Invest 2019-07-19: Weak 2Q19 Y-o-y Profit, Optimistic Outlook; BUY

KEPPEL CORPORATION LIMITED (SGX:BN4) | SGinvestors.io KEPPEL CORPORATION LIMITED (SGX:BN4)

Keppel Corporation - Weak 2Q19 Y-o-y Profit, Optimistic Outlook; BUY

  • Maintain BUY with new SGD7.30 Target Price from SGD7.33, 11% upside, plus 4% yield.
  • 2Q19 results slightly missed, with 1H19 net profit of SGD356m representing 37% of our 2019F pre-results. However, we believe the property division could see stronger numbers in 2H19 – we are encouraged by the early-July strong sales at Seasons Residences.



Property division recorded 2Q19 PBT -38% YoY

  • Property division recorded 2Q19 PBT -38% y-o-y to SGD161m, due mainly to the absence of gains from en-bloc sales of development projects vs 2Q18. This came on the back of property division 2Q19 revenue rising 11% y-o-y, mainly due to higher revenue from China trading projects such as Waterfront Residences in Wuxi, and Serenity Villa in Chengdu.


Offshore & -21% y-o-y

  • Offshore & Marine jackup rigs to Borr Drilling vs 2Q18. However, the O&M division recorded 2Q19 pre-tax profit of SGD4m, an improvement vs 2Q18’s SGD11m pre-tax loss.


Outlook is positive.

  • Keppel O&M secured YTD new contracts of SGD1 launched 193 homes at Seasons Residences Phase 3 in Tianjin Eco-City, and all units were sold within a day – these sales were not included in 1H19 numbers. However, due to the weak 1H19 earnings, we lower FY19F recurring net profit by 8%.


Valuation – diversified asset structure with huge value unlocking potential.

  • The Board approved 8/share.
  • As Keppel Corp (SGX:BN4) has multiple businesses with exposure in different industries, we took the SOP methodology to value it, and arrived at Target Price of SGD7.30 based on





Leng Seng Choon CFA RHB Securities Research | https://www.rhbinvest.com.sg/ 2019-07-19
SGX Stock Analyst Report BUY MAINTAIN BUY 7.30 DOWN 7.330



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