Keppel Corporation - OCBC Investment 2021-04-23: Continued Restructuring

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

Keppel Corporation - Continued Restructuring

  • Keppel Corp (SGX:BN4)'s 1Q21 net profit slightly higher than S$160m in 1Q20.
  • Impairments from Kris Energy likely in coming quarters.
  • Expecting order win from Brazil while pursuing asset light strategy.



Price action since last report



Keppel Corp's 1Q21 net profit slightly higher than S$160m in 1Q20

  • Keppel Corp provided an update on its 1Q21 operations, delivering a net profit in 1Q21 that was slightly higher compared to the S$160m net profit in 1Q20. Most of the net profit in 1Q21 was from operating income, compared to 1Q20 where Keppel Corp had a sizeable contribution from the reclassification of Keppel Infrastructure Trust (SGX:A7RU).
  • Net gearing was lower at 0.88x as at 31 Mar 2021, vs 0.91x as at 31 Dec 2020 and 1.00x as at Jun 2020.


Impairments from KrisEnergy likely in coming quarters

  • Recall that Keppel Corp invested in Kris Energy (SGX:SK3) in 2012, at a time when Brent crude was over US$100/bbl. However Kris Energy started facing problems in 2014 when oil prices plunged, and recently Keppel Corp announced that due to the significant underperformance of its key asset, Cambodia Block A, the consensual restructuring exercise which commenced in 2019 is no longer viable.
  • We understand that Keppel Corp’s carrying value of S$423m is mostly secured by Kris Energy’s oil and gas assets, but it is hard to determine the actual impact at this point in time given that the NSAI report (which provides estimation of the reserves etc) is not finalised yet.

Expecting order win from Brazil






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-04-23
SGX Stock Analyst Report HOLD MAINTAIN HOLD 5.50 UP 5.200



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