Keppel Corporation - OCBC Investment 2020-04-30: Re-Orienting For The Future

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

Keppel Corporation - Re-Orienting For The Future

  • O&M to face very challenging conditions in near future.
  • Finalising 2030 strategy.
  • Focus still on Temasek offer.



21% fall in Keppel Corp's net profit in 1Q

  • Although Keppel Corp (SGX:BN4) reported a 21.3% y-o-y rise in revenue to S$1.86b in 1Q20, the group saw a 20.9% fall in net profit to S$160.5m in the quarter, partly due to the absence of gains. See Keppel Corp Announcements.
  • Recall that 1Q19 results were boosted by gains from the divestment of a 70% interest in Dong Nai Waterfront City, Vietnam a year ago.
  • Net gearing inched up from 0.85x as at end FY19 to 0.88x as at 1Q20.




Segmental breakdown; infrastructure boosted by one-off gains

  • The Offshore & Marine division reported net profit of S$3m for 1Q20 vs. a net profit of S$6m a year ago, mainly due to the share of losses from associated companies which had offset the division’s stronger operating results. Net order book was S$4.0b as at end Mar 2020, of which renewables and gas-related solution accounted for more than 70%.
  • As for Property, the division’s net profit of S$35m was 73% y-o-y lower mainly due to the absence of gain from the disposal of Dong Nai a year ago. In 1Q20, Keppel Land sold 450 homes, which was 15% higher compared to 1Q19; China contributed over 70% of sales volume, with more than 200 homes sold taking place in Feb and Mar, after the COVID-19 outbreak.
  • As for Infrastructure, net profit was higher at S$174m in 1Q20, compared to S$16m in 1Q19, mainly due to a mark-to-market gain of S$131m from the reclassification of the group’s interest in Keppel Infra Trust (SGX:A7RU) from an associated company to an investment. Excluding this, Keppel Infrastructure’s earnings doubled compared to a year ago.
  • Investments registered a net loss of S$52m in 1Q20 vs. a net profit of S$49m in 1Q19 with the absence of one-off gains, as well as mark-to-market losses on some investments.


Finalising Vision 2030 strategy






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2020-04-30
SGX Stock Analyst Report BUY MAINTAIN BUY 7.16 DOWN 7.580



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