The Good And Bad That Investors Should Know About Keppel Corporation Limited’s 2017 Earnings
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with a few major business segments: Offshore & Marine; Property; Infrastructure; and Investments.
Last week, the company reported its 2017 fourth quarter and full year earnings update. There are both positive and negative takeaways that investors may want to learn about. But first, let’s take a look at Keppel Corp’s results for 2017.
Here’s a table showing changes in the company’s revenue, operating profit, net profit, and earnings per share in 2017:

Source: Keppel Corp 2017 full year earnings press release
The positives
Firstly, Keppel Corp produced growth in net profit in 2017 (excluding the costs from the Offshore & Marine segment’s corruption-related one-off financial penalty). This was driven by an improvement in profitability in all its segments, except for the Offshore & Marine segment.
Secondly, the company’s free cash flow improved from S$540 million in 2016 to S$1.80 billion in 2017, mainly due to an improvement in the management of its working capital. To the point, in 2016, working capital changes resulted in an outflow of S$586 million in cash, whereas there was an inflow of S$1.29 billion in cash in 2017.
Thirdly, Keppel Corp’s balance sheet had grown stronger. At the end of 2017, the conglomerate had S$2.27 billion in cash and equivalents, with total borrowings of S$7.79 billion. This translates to a net debt position of around S$5.52 billion, which is an improvement from the S$6.97 billion in net debt that it had at the end of 2016.
Lastly, the conglomerate raised its full-year dividend in 2017 to S$0.22 per share, from S$0.20 per share in 2016.
The negatives
Firstly, revenue came in lower in 2017 compared to 2016. This was due to a lower top-line in its Offshore & Marine, and Property segments.
Secondly, the conglomerate’s EBITDA (earnings before interest, taxes, depreciation, and amortization) as well as operating profit came in lower in 2017. The former was down by 4% to S$988 million, while the latter declined by 2.5% to S$775.7 million.
Lastly, the Offshore & Marine segment incurred a loss of S$835 million in 2017, compared to a net profit of S$29 million a year ago. This was mainly due to the aforementioned one-off financial penalty, which amounted to S$619 million. Some other big culprits were an S$81 million provision for losses made on Sete Brasil-related projects, and a S$54 million impairment on certain assets.
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How Did Keppel Corporation Limited’s Infrastructure Business Fare In 2017?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with four major business segments, namely, Offshore & Marine, Property, Infrastructure, and Investment.
In late January, Keppel Corp reported its 2017 full year earnings. Given that the company has a few businesses, I thought it would be useful to take a separate look at each of the components. In earlier articles, I had discussed the Offshore & Marine and Property segments. In this article, my focus is on the Infrastructure business.
The financial performance
Here’s a table showing some key financial numbers for the Infrastructure business for 2017:

Source: Keppel Corp 2017 full year earnings presentation
We can see that the Infrastructure segment had a good year in 2017. Revenue was up by 27% to S$2.21 billion, mainly due to higher sales in the power and gas business, and progressive revenue recognition from the Keppel Marina East Desalination Plant project. The segment’s recurring revenue also increased to S$160 million due to contributions from the operations and maintenance of infrastructure assets across Singapore and Qatar.
The net profit growth of 33% was due to higher revenue, and also the gain on the sale of Keppel Corp’s interest in GE Keppel Energy Services Pte Ltd. Fair value gains on the segment’s investments also contributed.
The future
In Keppel Corp’s earnings release, the conglomerate shared a few words on the Infrastructure segment’s future:
“In the Infrastructure Division, Keppel Infrastructure will continue to build on its core competencies in energy and environment-related infrastructure as well as infrastructure services businesses to pursue promising growth areas.
Keppel Telecommunications & Transportation (SGX: K11) will continue to develop its data centre business locally and overseas. Besides building complementary capabilities in the growing e-commerce business, it plans to transform the logistics business from an asset heavy business to a high performing asset-light service provider in urban logistics.”
In 2017, the Infrastructure business secured a number of new contracts. For example, Keppel Seghers and Zhen Hua secured a S$5.3 billion contract to design, build, and operate Hong Kong’s first Integrated Waste Management Facility. Keppel Corp’s share of the contract is approximately S$1.95 billion. In other instances, Keppel Seghers secured two new contracts to provide technology solutions to WTE (waste-to-energy) plants in Beijing and Hunan.
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How Did Keppel Corporation Limited’s Property Business Fare In 2017?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with four major business segments, namely, Offshore & Marine, Property, Infrastructure, and Investment.
In late January, Keppel Corp reported its 2017 full year earnings. Given that the company has a few businesses, I thought it would be useful to take a separate look at each of the components. In an earlier article, I had discussed the Offshore & Marine segment. In this article, my focus is on the Property business.
The financial performance
Here’s a table showing some key financial numbers for the Property business for 2017:

Source: Keppel Corp 2017 full year earnings presentation
We can see that the Property segment had a mixed year. Its revenue fell 12% to S$1.78 billion, due mainly to lower revenue from China and Singapore. But, its net profit grew 10% to S$685 million, driven by  higher fair value gains on investment properties, higher contributions from Singapore and Vietnam property trading activities, and en-bloc sales of development projects. These were partly offset by a lower share of profits from associated companies, and the absence of a reversal of an impairment for hospitality assets recorded in 2016.
What’s also useful to know is that the Property segment was the biggest profit contributor to Keppel Corp in 2017.
Useful business statistics
There are a few useful statistics on Keppel Corp’s property business that investors may want to know.
Firstly, the segment sold more than 5,480 homes in 2017, comprising 3,725 in China, 1,110 in Vietnam, 380 in Singapore, and 270 in Indonesia. This was 4.2% lower than in 2016, when 5,720 homes were sold.
Secondly, Keppel REIT’s (SGX: K71U) office buildings in Singapore and Australia maintained a high committed occupancy rate of 99.7% at the end of 2017.
Thirdly, in 2017 Keppel Land divested three projects, which have a total of 4,330 homes. This is significantly higher than the 630 homes divested in 2016.
Fourthly, the Property segment has a residential pipeline of 63,000 homes. Keppel Corp is also studying the redevelopment potential of Keppel Towers and Nassim Woods, which can potentially add another 500 homes to the company’s Singapore landbank of 1,200 homes.
Lastly, on the commercial front, Keppel Land has a GFA (gross floor area) of 1.5 million square metres that is either completed, or under development. When fully stabilised, this portfolio can generate an annual net operating income of about S$300 million. This can help grow the Property segment’s recurring income.
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How Did Keppel Corporation Limited’s Offshore & Marine Business Fare In 2017?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with four major business segments, namely, Offshore & Marine, Property, Infrastructure, and Investment.
In late January, Keppel Corp reported its 2017 full year earnings. Given that the company has a few businesses, I thought it would be useful to take a separate look at each of the segments. In this article, my focus is on the Offshore & Marine segment.
The financial performance
Here’s a table showing some key financial numbers for the Offshore & Marine business for 2017:

Source: Keppel Corp 2017 full year earnings presentation
We can see that 2017 was not a good year for the segment. Its revenue was 37% lower, and it clocked a big pre-tax loss of S$862 million compared to a pre-tax profit of S$90 million in 2016.
The pre-tax loss was mainly due to stiff penalties that stemmed from fines related to corruption issues in Brazil that the Offshore & Marine business was involved with. But even when the penalties are adjusted for, the Offshore & Marine segment still logged a pre-tax loss of S$243 million in 2017. Lower revenue, a fall in associates’ profits, and the presence of impairments all contributed.
Clearly, the recent upturn in oil prices (an increase from around US$50 per barrel at the start of 2017 to around US$60 at end-2017) has yet to benefit the Offshore & Marine segment.
The order book
The Offshore & Marine segment’s order book is a good indicator of the overall health of this business. Any growth in the order book could mean that the segment has turned around.
As of 31 December 2017, the net order book of the segment (excluding orders from Sete Brasil) stood at S$3.9 billion. This is slightly higher than the net book order value seen at end-2016 (S$3.75 billion), and could indicate that the Offshore & Marine business may finally be seeing some light at the end of the tunnel.
The future
In Keppel Corporation’s earnings release, the conglomerate shared a few words on the Offshore & Marine segment’s future:
“The Offshore & Marine Division’s net order book, excluding the Sete rigs, stands at $3.9 billion. The Division will continue to focus on delivering its projects well, exploring new markets and opportunities, investing prudently in R&D and building new capabilities to position itself for the upturn. The Division is also actively capturing opportunities in production assets, specialized vessels and the growing gas market and exploring ways to re-purpose its technology in the offshore industry for other uses.”
Some closing words
In sum, Keppel Corp’s Offshore & Marine segment had a challenging 2017. On a slightly positive note, with oil prices currently at over US$60 per barrel, companies in the oil & gas industry may want to start investing again. If this is true, it would be a positive to Keppel Corp’s Offshore & Marine business.
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It’s a Wrap: The Top 3 and Bottom 3 Blue-Chip Stocks for January
- Original Post from The Motley Fool Sg

The Straits Times Index (SGX: ^STI), which tracks the performance of the top 30 largest and most liquid companies listed in Singapore, started 2018 on a good footing.
For the month of January, the local stock market benchmark hit a high of 3,609.24 points on 24 January before retreating to finish at 3,533.99 points on 31 January. In all, as compared to the previous month, the Straits Times Index added 3.9%.
Of the 30 index components, 23 were in the green, five were in the red while two – Thai Beverage Public Company Limited (SGX: Y92) and Hutchison Port Hldg Trust (SGX: NS8U) – ended the month unchanged.
The top three winners of the STI were Keppel Corporation Limited (SGX: BN4), Venture Corporation Ltd (SGX: V03) and Sembcorp Industries Limited (SGX: U96).
Source: S&P Global Market Intelligence
Keppel Corporation and Sembcorp Industries, which are the world’s major oil rig builders, performed exceptionally well for January.
Keppel Corporation, for one, can look forward to the future after taking a one-off charge of S$618.7 million for the 2017 fourth quarter. The expense is related to the global resolution with criminal authorities following investigations on corrupt payments made by a former agent of its unit, Keppel Offshore & Marine, in Brazil.
Due to the one-off expense, Keppel Corporation’s full-year net profit plunged 72.4% year-on-year to S$216.7 million. Excluding this, the conglomerate would have achieved a net profit of around S$836 million for the latest financial year, up 7% as compared to the previous year’s S$784 million.
It remains to be seen if Sembcorp Marine Ltd (SGX: S51), which is 60.9% owned by Sembcorp Industries, will face a similar penalty. Reuters reported that “in plea testimony made public in Brazil in March 2015, a former Petrobras executive said a representative of Sembcorp’s Jurong Aracruz shipyard was involved in bribe payments”.
Venture Corporation was recently added to the Straits Times Index after Global Logistic Properties Ltd (SGX: MC0) was in the midst of being privatised then. Less than a month after being promoted to the league of the big boys, its shares had soared some 13% in January.
On the other hand, the top three losers of the index were CapitaLand Commercial Trust (SGX: C61U), Jardine Cycle & Carriage Ltd (SGX: C07) and CapitaLand Mall Trust (SGX: C38U).
Source: S&P Global Market Intelligence
CapitaLand Commercial Trust, which undertook a rights issue in October 2017 to partially fund the acquisition of the retail and office components of Asia Square Tower 2, posted a 4.6% year-on-year fall in distribution per unit (DPU) to 8.66 cents for the full year ended 31 December 2017. The fall was despite gross revenue for the year increasing 13% to S$337.5 million and net property income (NPI) growing 14.8% to S$265.5 million. The enlarged units base indeed took a huge toll on the DPU.
In what was the exact opposite of CapitaLand Commercial Trust, CapitaLand Mall Trust managed to achieve a higher DPU for 2017 even though its gross revenue and NPI went in the other direction. For 2017, gross revenue tumbled 1.1% year-on-year to S$682.5 million while NPI slipped 0.3% to S$478.2 million. 2017’s DPU inched up 0.3% to 11.16 cents.
The SPDR STI ETF (SGX: ES3), an exchange-traded fund which can be taken as a proxy for the Straits Times Index, was valued at 11.9 times trailing earnings and had a dividend yield of 2.8%, as at 31 January 2018.
$Keppel Corp(BN4.SI) $Jardine C&C(C07.SI) $CapitaMall Trust(C38U.SI) $CapitaCom Trust(C61U.SI) $STI ETF(ES3.SI) $Global Logistic(MC0.SI) $HPH Trust USD(NS8U.SI) $Sembcorp Marine(S51.SI) $Sembcorp Ind(U96.SI) $Venture(V03.SI) $ThaiBev(Y92.SI)

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What Investors Need to Know About Keppel Corporation Limited’s 2017 Earnings
- Original Post from The Motley Fool Sg

Yesterday, Keppel Corporation Limited (SGX: BN4) announced its financial results for the full year ended 31 December 2017 (FY2017). Here are some things worth noting from the earnings announcement:
1. Keppel Corporation has four business divisions, namely, Offshore & Marine (O&M), Property, Infrastructure and Investments. The conglomerate’s revenue for the year came in at S$5.96 billion, down 11.9% year-on-year.
2. Both the O&M and Property divisions posted lower revenues while the other two divisions saw their incomes rise for FY2017.
3. Mainly due to a one-off penalty arising from Keppel O&M’s global resolution with criminal authorities and related expenses that totalled S$618.7 million, Keppel Corporation’s net profit plunged 72.4% to S$216.7 million. You can learn more about the saga here.
4. Consequently, earnings per share (EPS) fell 72.5% to 11.9 cents.
5. Excluding the one-off charges, the group would have achieved a net profit of around S$836 million for FY2017, up 7% as compared to FY2016’s S$784 million. The adjusted EPS would have been 46 cents.
6. As at 31 December 2017, Keppel Corporation had S$2.27 billion in cash hoard with total loans of S$7.79 billion. This translates to a net debt position of around S$5.52 billion, an improvement from S$6.97 billion in net debt that it had at the end of 2016.
7. Return on equity (ROE) for FY2017 dropped to 1.9% from 6.9% in FY2016 . Excluding the one-off expenses, ROE would have been 7% for the year.
8. The conglomerate generated S$1.38 billion in cash flow from operations in FY2017. With capital expenditure coming in at S$684.3 million, it brought in free cash flow of S$693.1 million for the year. In comparison, in FY2016, it raked in negative free cash flow of S$498.2 million.
9. Keppel Corporation has proposed a final dividend of 14 cents per share. Including the interim dividend already paid out, the total dividend for 2017 would be 22 cents per share, an increase from 20 cents per share dished out in 2016.
10. Loh Chin Hua, the chief executive of the group, said:
“The global resolution reached by Keppel O&M brings to an end what has been a painful chapter for Keppel. We have put in place effective compliance controls to ensure that this does not happen again. With the issue now behind us, we look forward to continuing on our growth trajectory and building a more disciplined and sustainable business – a Keppel that will remain trusted and admired by all our stakeholders.”
Keppel Corporation is currently going at S$8.51 per share. This translates to a price-to-earnings ratio of 71.5, including the one-off charges, or 18.5 without those expenses. The dividend yield is at 2.6%.
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