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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A Deeper Look at Keppel Corporation Limited’s Financial Performance In The First Half of 2018
- Original Post from The Motley Fool Sg

An important key to investing is to understand and critically evaluate the business behind every stock. Understanding and interpreting financial statements, especially those from diverse conglomerates such as Keppel Corporation Limited (SGX: BN4), can go a long way in honing our research skills and insight.
In July, Keppel Corp announced that its net profit for the first six months of 2018 rose 38% year-on-year to S$583 million. Keppel Corp’s business comprises four divisions: Property; Offshore and Marine; Infrastructure; and Investments.
When we take a more in-depth look at the performance of each division, we see that the Property division contributed to the bulk of Keppel Corp’s net profit; the division’s bottom line for the first half of 2018 came in at S$603 million (up 214% year-on-year). Two divisions – Offshore & Marine and Investments – suffered losses of S$40 million and S$46 million, respectively. The losses were partially offset by profit of S$66 million from the Infrastructure division. So, two out of four divisions did not turn a profit for Keppel Corp in the first half of 2018, and it is clear that the Property division is currently the most important profit generator for the conglomerate.
Interestingly, if we look at the revenue contributions by division, Infrastructure’s contribution to Keppel Corp was 40%, or S$1.2 billion. Offshore & Marine contributed S$939 million or 31%. Property only had a 26% contribution at S$787 million.
When we consolidate our analysis, we see that 70% of Keppel Corp’s revenue was derived from its Offshore and Infrastructure divisions, but their contribution to the conglomerate’s overall net profit was just S$26 million, or 4% of the total. It is also clear that the near-term outlook is challenging for the two divisions that contribute over two-thirds of Keppel Corp’s revenue stream.
Since the Property division is Keppel Corp’s most important profit generator, it is worth taking a deeper look at that business to have a better idea of the conglomerate’s financial performance in the future.In the first half of 2018, one of the big contributors to Keppel Corp’s 38% profit growth was a significant increase in other operating income from S$23 million a year ago to S$420 million. Now, the major components of Keppel Corp’s other operating income in the first half of 2018 were gains from the sale of two China subsidiaries from the Property division.
In summary, an important contributor to Keppel Corp’s bottom line in the first half of 2018 remains its Property division, of which one-time divestments of Chinese subsidiaries helped boost growth. As we look ahead to 2019 and beyond, for Keppel Corp to sustain or improve its net profit, a stronger performance from its Offshore & Marine and Infrastructure divisions would play a significant role, especially since the current property outlook in Singapore and rising interest rates are not favourable to the Property division.
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What Investors Should Know About Share Buybacks By Singapore Stocks In July 2018
- Original Post from The Motley Fool Sg

Last month, 52.5 million shares or units were repurchased by 37 stocks for a total amount of S$109 million, according to a recent report by the Singapore Exchange. Compared to June 2018, the latest buyback consideration was down 37%.
Blue-chip stocks took up seven spots out of the top 10 stocks with the largest buyback consideration value in July 2018.
In terms of value, the five stocks with the most share buybacks were United Overseas Bank Ltd (SGX: U11), DBS Group Holdings Ltd (SGX: D05), Wing Tai Holdings Limited (SGX: W05), Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) and Keppel Corporation Limited (SGX: BN4). These five companies contributed to 74% of the S$109 million in total consideration. The only listed bank not featured in the list above, Oversea-Chinese Banking Corp Limited (SGX: O39), slotted into the sixth spot with S$6.3 million worth of shares repurchased.
The sole real estate investment trust (REIT) featured in the July list was Keppel REIT (SGX: K71U). During its earnings release for the second quarter ended 30 June 2018, the REIT said that it would be starting a unit buy‐back programme. In an earlier article here, I mentioned that “I see Keppel REIT’s intention to buy back its units as a signal to the market that its units could be undervalued”.
I added that when Keppel REIT starts repurchasing its units, “it could be a stronger signal that its units are indeed undervalued”, as the REIT’s manager mentioned that it would “only purchase units when it is accretive to distribution and net asset value per unit”.
In July, the REIT’s manager repurchased 3.5 million units of Keppel REIT on 27, 30 and 31 July, for a total consideration of S$4.1 million. The units were bought back at a price range of S$1.15 to S$1.18 each. Keppel REIT took the seventh spot in the July share buyback list.
Warren Buffett is a huge advocate of companies buying back shares – if done for good reasons. And that is, if the company’s shares are undervalued, and the reinvestment opportunities into the business are not as attractive. Buffett also believes that share buybacks can reveal a thing or two about a company’s management. He once said:
“What you’d like to do as an investor is hook them up to a machine and run a polygraph to see whether it’s true. Short of a polygraph the best sign of a shareholder-oriented management — assuming its stock is undervalued — is repurchases. A polygraph proxy, that’s what it is.”
Keppel REIT closed at S$1.19 per unit yesterday, giving a price-to-book ratio of 0.82 and a distribution yield of 4.8%.
$Keppel Corp(BN4.SI) $YZJ Shipbldg SGD(BS6.SI) $DBS(D05.SI) $Keppel Reit(K71U.SI) $OCBC Bank(O39.SI) $UOB(U11.SI) $Wing Tai(W05.SI)

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How Did Keppel Corporation Limited’s Offshore & Marine Business Fare In The Latest Quarter?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments such as Offshore and Marine, Property, Infrastructure, and Investment.
Recently,Keppel Corporation reported its second quarter results for the year ending 31 December 2018. Here, we will have a quick summary of its Offshore and Marine segment’s performance.
Financial performance
Here’s a table showing some key financial numbers for the Offshore and Marine business for the first half of 2018:

Source: Keppel Corporation Results Presentation
Overall, we can see that most metrics worsened on a year-on-year basis.
For the first half of 2018, Offshore and Marine business reported a net loss of S$ 26 million (as opposed to a profit of S$13 million last year) mainly due to “lower operating results, lower share of associated companies’ profit as well as the absence of gain from divestment of Keppel Verolme, partly offset by lower net interest expense”.
The recent upturn in oil price has yet to benefit the Offshore and Marine’s financial performance.
Order book
The change in order book is a good indicator to gauge the overall health of the offshore and marine’s business. This is an important number to monitor since a huge uptick in this figure could mean that the industry has turned around.
As of 30 June 2018, the business division’s net order book stood at S$4.6 billion (excluding Sete Brasil). This is higher than the the net order book (excluding Sete Brasil) of S$3.9 billion, as at 31 December 2017. The higher order book could indicate that the division’s prospects might have turned around recently.
The future
In Keppel Corporation’s latest earnings update, the conglomerate shared a few words on the Offshore and Marine segment’s future:
“The Offshore & Marine Division’s net order book, excluding the Sete rigs, stands at $4.6 billion.The Division will continue to focus on delivering its projects well, exploring new markets and opportunities, investing in R&D and building new capabilities to position itself for the upturn. The Division is also actively capturing opportunities in production assets, specialised vessels, gas solutions, floating infrastructure and offshore renewables, as well as exploring ways to re-purpose its technology in the offshore industry for other uses.”
Conclusion
In sum, Keppel’s Offshore and Marine segment continued to deliver weak results.Yet, with oil price currently at above US$70 per barrel, companies in the oil and gas industry might start to invest in their businesses again. If this is true, investors should see better performance from theOffshore and Marine segment in the near future.
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How Did Keppel Corporation Limited’s Infrastructure Business Fare In The 2018 Second-Quarter?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments such as Offshore and Marine, Property, Infrastructure, and Investment. On 19 July, the conglomerate reported its second quarter results for the year ending 31 December 2018 (1Q FY2018). Let’s have a quick summary of its Infrastructure segment’s performance.
Financial performance
Here’s a table showing some key financial numbers for the Infrastructure business for the first half of 2018:

Source: Keppel Corporation Results Presentation
As a quick introduction, Keppel’s Infrastructure division comprises the conglomerate’s businesses in energy, environment and infrastructure services, as well as logistics and data centres.
Overall, we can see that the segment delivered a solid performance of higher revenue and profitability as compared to the same period last year.
Revenue from the Infrastructure segment grew by 23% to $1.21 billion as a result of increased sales in the power and gas businesses, as well as progressive revenue recognition from the Keppel Marina East Desalination Plant project.
This improvement in profit was mainly due to dilution gain from Keppel DC REIT’s private placement exercise as well as higher contribution from Environmental Infrastructure and Infrastructure Services. These were partially offset by lower contribution from Energy Infrastructure, lower share of profits from Keppel Infrastructure Trust (SGX: A7RU), and absence of gain from divestment.
The future
In Keppel Corp’s latest earnings update, 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 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.”
$Second Chance(528.SI) $Keppel Corp(BN4.SI)

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How Did Keppel Corporation Limited’s Property Business Fare In The 2018 Second-Quarter?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments, namely, Offshore and Marine, Property, Infrastructure, and Investment.On 19 July, the conglomerate reported its second quarter results for the year ending 31 December 2018 (1Q FY2018). Let’s have a quick summary of its Property segment’s performance.
Financial performance
Here’s a table showing some key financial numbers for the Property business for the second quarter of 2018:

Source: Keppel Corporation Results Presentation
As a quick introduction, the Property division deals with property trading, property investment, hotels and resorts, and real estate investment trust.
We can see from the table that the Property division had a mixed quarter with weaker revenue but higher profitability.
To start with, revenue more than halved mainly due to lower revenue from Singapore and China property trading.Yet, profitability improved mainly due to en-bloc sales of development projects and fair value gain on Nassim Woods, which has been designated as redevelopment for sale.
What’s useful to know is that the property segment was the biggest contributor to Keppel Corporation’s net profit, accounting for 92% of the latest quarter’s bottom-line.
The future
In its latest earnings update, the conglomerate shared a few words on the Property segment’s future:
“The Property Division sold about 1,420 homes in the first half of 2018, comprising about 130 in Singapore, 800 in China, 80 in Vietnam, 150 in Indonesia, 225 in India and 35 in Thailand.
Keppel REIT’s office buildings in Singapore and Australia maintained a high portfolio committed occupancy rate of 99.3% as at end-June 2018. Market sentiments in Singapore are expected to be dampened by new government cooling measures effective from 6 July 2018, which include higher Additional Buyer Stamp Duty rates for home buyers, investors and developers as well as the tightening of Loan-to-Value on housing loans. The Division will remain focused on strengthening its presence in its core and growth markets, while seeking opportunities to unlock value and recycle capital.”
$Second Chance(528.SI) $Keppel Corp(BN4.SI)

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