Keppel Corporation - CGS-CIMB Research 2020-08-10: No Deal From Temasek

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

Keppel Corporation - No Deal From Temasek

  • Temasek has invoked the MAC pre-condition and will not proceed with its partial offer for Keppel Corp (SGX:BN4). The SIC has confirmed and has no objection to this.
  • We expect Keppel Corp's share price to further correct in the near term to the previous trough of 0.82x P/BV or c.S$4.88.
  • Our SOP Target Price remains at S$6.46. 2H earnings recovery and stronger gains from asset recycling are catalysts. ADD after share price shock subsides.





No deal

  • Temasek has decided to invoke the material adverse changer (MAC) pre-condition, and will not proceed with its partial offer for Keppel Corp. The making of the partial offer by Temasek is subject to the satisfaction and/or waiver of a number of pre-conditions, which include there being no MAC in Keppel Corp’s financial performance and conditions, among others. See Keppel Corp Announcements and response.
  • Given the recent significant impairment (amounting to S$919m) taken by Keppel Corp in 2Q20 which resulted in a net loss of S$699m, the MAC clause was breached. Temasek had earlier announced that a decision would be made no later than 31 Aug 2020. This decision to walk way is slightly earlier than expected.


Not unreasonable to walk away



How will this impact the long-term merger?



Maintain ADD for the medium term; valuations not expensive






LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2020-08-10
SGX Stock Analyst Report ADD MAINTAIN ADD 6.460 SAME 6.460



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