KEPPEL CORPORATION LIMITED (SGX:BN4)
Keppel Corporation - Some Questions Answered
- Keppel Corp's briefing answers our question regarding the unlocking of value.
- Plans to monetise S$3-5b of S$17.5b of potential assets (carrying value) over next three years and redeploy the cash to seize new opportunities.
- Investors will then focus on the new growth areas and actual realised returns.
Analyst briefing yesterday sheds light on our question about the unlocking of value
- In our last report, “Temasek walks away…. for now?” on 11 August, we wondered aloud about Keppel Corp (SGX:BN4)’s stock, “Value in the stock, but when can it see light?” Last evening’s analyst briefing by Keppel Corp’s management seems to have partially answered this question that has been at the top of investors’ minds.
Reaffirmed Vision 2030 strategy and identifies assets to be monetised
- During the briefing yesterday, management reaffirmed its Vision 2030 strategy and also announced that it has identified assets with a total carrying value of about S$17.5b based on the group’s balance sheet as at 30 June 2020 that can potentially be monetised over time and channeled towards growth initiatives. These include landbank and projects under development, assets for monetisation through REITs/Trust or for sale and non-core assets (including O&M’s rigs), amongst others.
- Over the next three years, about S$3-5b of the S$17.5b figure would be monetised.
Undertaking strategic review of logistics and O&M
- In addition to its logistics business, Keppel Corp is undertaking a strategic review of its offshore and marine business, which includes both organic and inorganic options. The organic options include reviewing the strategy and business model of Keppel O&M, and assessing its current capacity and global network of yards. The inorganic options would range from strategic mergers to disposal.
In the midst of transformation
- We have always held the view that there is value in Keppel Corp’s stock waiting to be unlocked but the question is how and when. With management committed to undertaking steps to do this, investors will then focus on the new opportunities that the group will seize (including renewable energy, data centres and smart urban solutions) and its execution ability which will translate to realised returns eventually.
- We maintain our SOTP-based fair value estimate of S$6.40 on Keppel Corp; actual successful monetisations of undervalued assets would provide further support to the share price.
- BUY.
- See Keppel Corp Share Price; Keppel Corp Target Price; Keppel Corp Analyst Reports; Keppel Corp Dividend History; Keppel Corp Announcements; Keppel Corp Latest News.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2020-09-30
SGX Stock
Analyst Report
6.400
SAME
6.400
