Keppel Corporation - DBS Research 2020-05-29: Vision 2030 ~ A Sustainable Future

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KEPPEL CORPORATION LIMITED (SGX:BN4)

Keppel Corporation - Vision 2030 ~ A Sustainable Future

• Keppel Corp unveils Vision 2030 - building a sustainable future - during analyst briefing.
• Integrated and synergistic growth with sustainability at the core of the strategy; asset light model with higher recurring earnings.
• Segmental reporting will be reclassified from 2Q20.
• Maintain BUY; Target Price unchanged at S$6.80.

Keppel unveils Vision 2030 to chart its growth path in the next decade.

• Building on its current transformation plan, Keppel Corp (SGX:BN4) is taking a bigger step to refocus its portfolio towards sustainable urban solutions and connectivity as well as enhance collaboration across divisions.

Sustainability at the core of strategy.

• Keppel Corp will seize opportunities in green developments, renewables, new energy and circular economy solutions; refocus portfolio towards sustainable urban solutions; and set high-impact sustainability goals including carbon emissions, waste and water.

“Integrated” instead of “Conglomerate”.

• Keppel Corp will step up efforts in harnessing the unique strengths of all business units (BU) through BU+ Integration to
  1. expand into new markets;
  2. incubate new platforms that span multiple BUs;
  3. share common resources within the Group; and
  4. actively drive inter-BU cross-selling.

Keppel Corp's businesses to be re-segmentised.

• Starting from 2Q20, Keppel Corp's segmental breakdown will be reclassified as follows:
  • Energy & Environment
    • Keppel O&M
    • Keppel Infrastructure
    • Keppel Renewable Energy
    • Kris Energy (SGX:SK3)
  • Urban Development
    • Keppel Land
    • Keppel Urban Solutions
    • Tianjin Eco -City
  • Connectivity
    • M1
    • Keppel Data Centres
    • Keppel Logistics
  • Asset Management
    • Keppel Capital
    • Eco-system of private funds and listed REITs & Trust.

Target to achieve group ROE of 15% maintained.

• The ROE targets of various BUs set earlier remain unchanged despite the re-segmentation.

Capital recycling; quality earnings.

• Keppel Corp will continue its unique capital recycling model - pursue strategic M&A transactions as part of Keppel Corp’s growth engines and make selective divestments to free up Keppel’s balance sheet. It will also stay focused on growing recurring income.

Growth supported by scaling up asset management arm.

• Diversified product offerings through the Keppel Corp eco-system with real asset development in residential & commercial, senior living, education, logistics, data centers, infrastructure and offshore & marine.

Maintain BUY; Target Price unchanged at S$6.80.

• Vision 2030 illustrates Keppel Corp’s mission to be a creator of low-carbon smart cities, and powerhouse of end-to-end solutions for sustainable urbanisation; and re-emphasises its target to deliver 15% ROE with good dividends and strong growth trajectory.
• See Keppel Corp Share Price; Keppel Corp Target Price; Keppel Corp Analyst Reports; Keppel Corp Dividend History; Keppel Corp Announcements; Keppel Corp Latest News.

Pei Hwa HO DBS Group Research | https://www.dbsvickers.com/ 2020-05-29

SGX Stock Analyst Report BUY MAINTAIN BUY 6.800 SAME 6.800