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Keppel Corporation - DBS Research 2021-07-30: Things Starting To Get Better

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

Keppel Corporation - Things Starting To Get Better

  • Stellar 1H21 results is evidence of operational improvements taking place.
  • Dividend surprise -declared 12 cents interim DPS.
  • Yard merger provides further upside potential.
  • Good entry point; Reiterate BUY; target price S$6.20.



A stellar 1H21

  • Keppel Corp (SGX:BN4)’s earnings stage a strong rebound in 1H21, delivering net profit of S$300m, vs net loss of S$537m a year ago and net profit of S$31m in 2H20. Operational improvement seen across segments.
  • As previously guided, it made impairment of S$318m for its exposure in KrisEnergy following its liquidation filing. This was partially offset by S$269m representing its share of Floatel’s restructuring gain.
  • 1H21 made up ~40% of our full year estimate. We maintain our earnings forecast for now though we see upside risk to our numbers considering the expected divestment gains (~S$250m announced thus far) and property revaluation gain in 2H21.
  • O&M: OpCo was profitable. Keppel O&M (KOM) posted net profit of S$107m in 1H21, aided by Floatel restructuring gain (S$269m). Excluding the one-offs, KOM would have incurred net loss of S$87m, largely due to losses from Rigco and Devco. OpCo (the yard operations), which is proposed to be transferred to Sembcorp Marine under the yard combination MOU, was marginally profitable.

Dividend surprise - declared 12 cents interim dividend.

  • Keppel Corp declared an interim dividend of 12 cents, higher than expected as impairment related to KrisEnergy’s liquidation was ringfenced. This implies a payout ratio of ~40%.
  • The interim dividend has surpassed 2020’s full year dividend of 10 cents. This translates to annualised dividend yield of >4%.
  • Net gearing lower at 0.85x as of end Jun-2021, vs 0.91x at end 2020.

Reiterate BUY; target price S$ 6.20, implying 1.0x P/BV.






Pei Hwa HO DBS Group Research | https://www.dbsvickers.com/ 2021-07-30
SGX Stock Analyst Report BUY MAINTAIN BUY 6.200 SAME 6.200



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