Keppel Corporation - OCBC Investment 2022-02-17: Outperformer So Far This Year

KEPPEL CORPORATION LIMITED (SGX:BN4)

Keppel Corporation - Outperformer So Far This Year

Keppel Corp's share price at 52-week high (16 Feb close).
Supported by FY21 results announcement, sizeable dividend and share buyback programme.
Enters into arbitration proceedings with SPH.

Since the start of the year, Keppel Corp's share price has appreciated by about 18% (based on the closing price of S$6.08 on 17 February 2022), significantly outperforming the broader Straits Times Index.

One of the main reasons behind this good price performance is the FY21 earnings announcement by Keppel Corp (SGX:BN4), during which the group reported net profit of S$1.02b for the full year, which is the highest achieved in the past six years since the offshore & marine (O&M) downturn. This marked a sharp reversal from FY20’s net loss of S$506m.
Keppel Corp’s recurring income grew 33% y-o-y and contributed S$292m to the group’s net profit for FY21, anchored by contributions from Keppel Corp’s stakes in its REITs & Trust, infrastructure services, as well as asset management.

The market was also receptive to Keppel Corp's announcement of a sizeable final dividend of S$0.21/share (which reflected the success of Keppel Corp’s asset monetization programme) as well as the S$500m share buyback programme that allowed the purchase of up to a maximum of 2% of Keppel Corp’s issued shares.

We have also been closely monitoring for updates on the proposed merger of Keppel Corp’s O&M business with Sembcorp Marine (SGX:S51), and understand that talks remain ongoing, with hopes to enter into a definitive agreement by 1Q22.
As for proposed acquisition of SPH (SGX:T39) shares by scheme of arrangement, Keppel Pegasus does not agree with SPH's attempted purported termination of the Keppel Implementation Agreement and filed a notice of arbitration with the Singapore International Arbitration Centre to commence arbitration proceedings against SPH.
See

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2022-02-17

SGX Stock Analyst Report BUY MAINTAIN BUY 7.00 UP 6.330