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.
$Keppel Corp(BN4.SI)

Read more

Recommended & Related Posts

Institutional Investors Have Been Buying These 3 Stocks
- Original Post from The Motley Fool Sg

There are many ways to find investment ideas. Some useful methods are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.
Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas.
In this article, I will look at three Singapore stocks (among the top ten stocks) that have seen the highest net purchases in dollar value by institutional investors in for the week ended 27 April 2018. They are: Keppel Corporation Limited (SGX: BN4), Singapore Exchange Limited (SGX: S68), and Singapore Telecommunications Limited (SGX: Z74).

Source: Singapore Exchange; SGX Stock Facts
Keppel Corp is one of the Singapore stock market’s largest conglomerates. It has four major business segments: Offshore and Marine; Property; Infrastructure; and Investment. In the past few years, Keppel Corp has seen its business results deteriorate, mainly due to the decline in oil prices that started in 2014. Recently, however, the company has displayed signs of a turnaround in its business.
For 2018’s first quarter, Keppel Corp reported that its revenue was up by 17.8% year-on-year to S$1.47 billion. Its net profit attributable to shareholders did even better, rising by 33.7% year-on-year to S$337.5 million. Similarly, earnings per share was up 34% to 18.6 cents. The conglomerate’s growth was driven by strong performances in its Property and Infrastructure divisions.
In addition to the higher top line and bottom line, Keppel Corp improved its balance sheet; as of 31 March 2018, it had a net debt position of S$5.1 billion, down from S$7.1 billion a year ago. Moreover, the Offshore and Marine segment’s net order book (exclude Sete Brasil orders) grew on both a year-on-year and sequential basis. The net order book ended 2018’s first quarter at S$4.3 billion, up from S$3.5 billion at 2017’s first quarter, and from S$3.9 billion as of 31 December 2017.
On Keppel Corp’s prospects for the rest of the year, the company’s CEO, Loh Chin Hua said:
“Markets have been roiled in recent weeks by concerns over rising trade tensions between the US and China as well as the situation in the Middle East. However, the global economy continues to enjoy broad-based growth, with improved business sentiments in both advanced economies and emerging markets. Strong urbanisation trends continue to present many opportunities for the Keppel Group across our businesses.”
The next company on the list, Singapore Exchange, is a company many investors in Singapore are likely to be familiar with, since it actually runs the only stock exchange in town.
In a similar manner to Keppel Corp, Singapore Exchange also delivered a strong earnings update for the first quarter of 2018 (the quarter is the company’s third fiscal quarter).
In the quarter, Singapore Exchange experienced a 9.6% year-on-year increase in revenue to S$222.2 million, and a 21.0% jump in profit attributable to shareholders to S$100.5 million. As of 31 March 2018, the company had S$800.0 million in cash on the balance sheet and no debt; the balance sheet had strengthened from a year ago when there was S$739.4 million in cash and no debt. An interim dividend of S$0.05 per share was also declared, unchanged from a year ago,
Singapore Exchange’s chief executive, Loh Boon Chye, shared some comments on the performance in the earnings update:
“We achieved a strong set of results this quarter, with our net profit reaching a new 10-year record high and our revenues hitting their highest levels since we listed in 2000. We actively engaged liquidity providers and focused on outreach to investors, which contributed to increased activity in the securities market. Our marketing efforts, together with longer trading hours enabled by our new derivatives trading and clearing platform, added to an increase in global participation across products and trading sessions.”
On its future, this is what Singapore Exchange had to say:
“With improved global growth, more central banks are seen adopting tightening measures, which will lead to investors rebalancing their portfolios. We expect market activity to improve as investors seek avenues to manage their portfolio risk. Looking forward, we will continue to build on our multi-asset offering and increase our servicing and marketing efforts across our domestic and international client base. We will also strengthen our global network through strategic partnerships and alliances.”
Lastly, we have Singtel, the biggest operational telco in Singapore. Incumbents in the local telco market has come under significant pressure in recent times. And that’s before the fourth telco, the Australia-based TPG Telecom, launches its service here in the second half of 2018 after winning the bid for Singapore’s fourth telco license in December 2016.
In the first quarter of 2018 (Singtel’s fiscal fourth quarter), the telco delivered a mixed performance. Although operating revenue inched up by 0.4% year-on-year to S$4.33 billion, net profit was down by 19.0% to S$781 million. Even after stripping away one-time items, Singtel’s underlying net profit still declined by 17.9% year-on-year to S$807 million. The good thing is that Singtel’s free cash flow for the quarter had increased by 4.8% year-on-year to S$1.34 billion.
The telco also declared a final dividend of 10.7 cents per share (unchanged from a year ago) to bring the total ordinary dividend for its fiscal year to 17.5 cents (again unchanged from the previous year).
Looking ahead, Singtel expects the following:
1) Revenue growth in the “low single digit”;
2) No growth in EBITDA (earnings before interest, taxes, depreciation, and amortisation);
3) Capital expenditure of S$2.2 billion;
4) Free cash flow of around S$1.9 billion;
5) Dividends from regional associates of around S$1.4 billion;
6) To maintain its dividend at 17.5 cents per share for the next two financial years before reverting to a dividend policy of keeping its payout ratio to between 60% and 75% of its underlying net profit.
Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment ideas. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.
$Keppel Corp(BN4.SI) $SGX(S68.SI) $SingTel(Z74.SI)

Read more
3 Negative Aspects of Keppel Corporation Limited’s 2018 First-Quarter Results
- Original Post from The Motley Fool Sg

The headline numbers were indeed positive; Keppel Corporation Limited’s (SGX:BN4) revenue and net profit for the first quarter of 2018 grew 18% and 34% respectively. However, beyond those numbers, there are certainly aspects of the business to suggest that all is not as rosy as the headlines may seem to suggest.
Poor performance from the offshore & marine segment
Keppel Corp breaks down its operations into four main business segments – offshore & marine, property, infrastructure and investments.
The offshore & marine segment comprises repair and building of drilling rigs, power barges, specialised vessels and other offshore production facilities. This segment is traditionally dependent on the oil and gas sector.
Unfortunately, despite oil price increasing over the past two years, Keppel Corp has been unable to turn its offshore & marine business around. The division recorded just S$332 million in revenue this quarter, down 31% from the SS$483 million seen during the same period last year. Worryingly, the division ended with a loss of S$23 million for the quarter.
A one-off gain from the property segment skewed revenue and profit
Much of the increase in revenue for the quarter was due to a one-off divestment gain of Keppel Cove in Zhongshan, China. Excluding the one-off gain, net profit from the segment would only have been S$89 million instead of S$378 million. The chart below shows the representation of net profit from each of the four segments.

Source: Keppel Corporation 2018 Q1 results presentation
As you can see, a disproportionate amount of net profit was from the property segment.
Even with new projects under way, including both commercial and residential development projects, the returns from the projects are going to be lumpy. It is, therefore, important that shareholders realise that revenue and profit contribution from this segment will fluctuate over the longer term.
Poor performances from the investments and infrastructure segments
Finally, Keppel Corp reported poor performances in both its infrastructure and investments segments. Net profit from the infrastructure segment declined a substantial 19% to S$26 million, while its investments arm reported a net loss of S$44 million. This was a reversal from the net gain of S$125 million a year ago.
The Foolish bottom line
Keppel Corp’s shareholders may understandably be happy with the conglomerate’s headline improvement in revenue and profit. However, beyond those numbers lie concerning trends that suggest there are areas that can be improved upon.
$Keppel Corp(BN4.SI) $First Reit(AW9U.SI) $Keppel Corp(BN4.SI)

Read more
Keppel Corporation Limited’s Stock Is Up By 24% Over The Last 12 Months: Is It Expensive Now?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is one of the largest conglomerates in Singapore’s stock market. It has four major business segments, namely, offshore and marine, property, infrastructure, and investments.
Over the last 12 months, Keppel Corp’s stock price has increased by 24% to S$8.22. This raises a question: Is it an expensive stock now?
Unfortunately, there is no easy answer. But, we can still get some insight by comparing Keppel Corp’s current valuations with the market’s. The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.
I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).
Keppel Corp currently has a PB ratio of 1.29, which is only marginally higher than the SPDR STI ETF’s PB ratio of 1.24. But, the conglomerate’s PE ratio of 49.5 is significantly higher than the SPDR STI ETF’s earnings multiple of just 11.55. Coming to the dividend yield, Keppel Corp also loses out to the market. It has a yield of 2.7%, compared to the SPDR STI ETF’s yield of 2.81%. The lower a stock’s yield is, the higher is its valuation.
One thing that investors should pay attention to about Keppel Corp’s PE ratio is that it is distorted by the low net profit of S$217 million in 2017, which was mainly a result of a large non-recurring expense of S$619 million. The expense stems from a fine that’s related to the company’s involvement in corruption issues in Brazil. If I adjust for the one-off event, Keppel Corp’s PE ratio will fall to just 16.7. Nonetheless, it’s still higher than the market’s PE ratio.
So when I put everything together, I can argue that Keppel Corp is trading at a premium to the market.
$Keppel Corp(BN4.SI) $STI(^STI.IN) $Keppel Corp(BN4.SI) $STI ETF(ES3.SI)

Read more
How Did Keppel Corporation Limited’s Infrastructure Business Fare In The First Quarter Of 2018?
- 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 mid-April, Keppel Corp reported its 2018 first quarter 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 previous articles, I had discussed the Offshore & Marine and Property segments. My focus in this article is on the Property segment.
The financial performance
Here’s a table showing some key financial numbers for the Infrastructure business for the first quarter of 2018:

Source: Keppel Corp 2018 first quarter earnings presentation
As a quick introduction, Keppel Corp’s infrastructure division deals with the provision of energy, environmental, infrastructure, logistics, and data centre services.
We can see that the segment had delivered a mixed performance in the first quarter of 2018. Revenue increased by 21% year-on-year due to increased sales in the power and gas businesses, as well as revenue recognition from the Keppel Marina East Desalination Plant. Yet, the bottom line declined mainly due to the absence of divestment gains in the reporting quarter. Excluding the one-off numbers, the pre-tax profit of the Infrastructure segment would have increased by S$5 million instead.
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.”
$Keppel Corp(BN4.SI)

Read more
How Did Keppel Corporation Limited’s Property Business Fare In The First Quarter Of 2018?
- 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 mid-April, Keppel Corp reported its 2018 first quarter 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 a previous article, I discussed the Offshore & Marine segment. My focus in this article is on the Property segment.
The financial performance
Here’s a table showing some key financial numbers for the Property business for the first quarter of 2018:

Source: Keppel Corp 2018 first quarter earnings presentation
As a quick introduction, Keppel’s Property segment deals with property trading, property investment, and the management of hotels, resorts, and REITs.
We can see from the table above that the segment delivered a solid performance in the first quarter of 2018.
Revenue more than doubled mainly due to strong performances in China and Singapore. Similarly, profit before tax soared by 303% mainly due to “the gain on divestment of the stake in Keppel China Marina Holdings Pte Ltd as well as higher contribution from Singapore and China property trading, partly offset by lower share of associated companies’ profits.”
What’s also useful to know is that the Property segment was the biggest contributor to Keppel Corporation’s net profit in 2018’s first quarter, accounting for 112% (more than 100% due to losses in two segments) of the net profit figure.
The future
In Keppel Corp’s latest earnings update, the conglomerate shared a few words on the Property segment’s future:
“The Property Division sold about 300 homes in the first quarter of 2018, comprising about 190 in China, 50 in Vietnam and 60 in Singapore. Keppel REIT’s office buildings in Singapore and Australia maintained a high portfolio committed occupancy rate of 99.4% as at end-March 2018. The Division will remain focused on strengthening its presence in its core and growth markets, while seeking opportunities to unlock value and recycle capital.”
Some closing words
In sum, Keppel Corp’s Property segment delivered a solid performance to start 2018.
$Keppel Corp(BN4.SI)

Read more

There are more for you ...

View more and participate in our discussion now. It's FREE.

Creating an account means you’re okay with InvestingNote's Terms and Conditions