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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Is Keppel Corporation Limited A Bargain Now?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a Singapore-listed industrial conglomerate. Its interests lie in four main areas, namely, property, offshore and marine, infrastructure and investments.

Between 1 Jan and 31 Dec 2018, Keppel’s share price dropped by 16.4% compared to a fall of 6.5% for the STI Index (SGX: ^STI). So, is it a bargain?

Four separate metrics, namely, the price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, the dividend yield and the net debt-to-equity ratio could provide some clues.

Keppel has a trailing twelve months (TTM) earnings per share of S$0.18. But if one-off costs are excluded, then the TTM earnings would be S$0.52. With the conglomerate’s current share price standing at S$6.25, this implies a P/E ratio of 34.7. If the one-time losses are excluded, the P/E would be 12.1.

Apart from lookingat the P/E ratio, we could also compare Keppel’s earnings per share (EPS) over time. This could provide a better idea as to how it has been doing. In the last four years (2014-2017) Keppel’s EPS has ranged from S$0.12 (S$0.43, excluding one-time losses) to S$1.04.

At the end of the third quarter of 2018, Keppel reported a Net Asset Value of S$6.30. At the current share price, this results in a P/B ratio of 0.99. What this means is that investors are currently paying S$0.99 for every dollar of assets. Whilst that is not much of a bargain, it could also mean that Keppel is not overpriced.

Additionally, Keppel has seen an increasing trend in its NAV over the past four years moving from S$5.73 to S$6.29. There was a further improvement to S$6.30 after the first nine months of 2018.

At the end of September 2018, Keppel had net debt of S$4.8 billion and equity of S$11.4 billion, indicating a net debt-to-equity ratio of 41%. This is in line with its four-year range from 11% to 56%.

Lastly, the company’s dividend has taken a beating over the last four years decreasing from S$0.48 in 2014 to S$0.22 in 2017. Assuming the company pays out a dividend at the same rate as 2017, this would lead to a yield of 3.5% at current prices.

Looking at the four metrics, it seems likely that Keppel warrants further evaluation, as three of the ratios appear to indicate that it might be a bargain at current prices.

The Motley Fool Singapore writer Esjay contributed towards this article. Esjay does not own shares in Keppel Corp.

$STI(^STI.IN) $Keppel Corp(BN4.SI)

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Singapore Press Holdings Limited’s First Quarter Earnings: What Investors Should Know
- Original Post from The Motley Fool Sg

Singapore Press Holdings Limited (SGX: T39) is Asia’s leading media organisation with four operating segments, namely, media, property, treasury and investment, and others.

On Friday, Singapore Press Holdings (SPH) announced its financial results for the first quarter ended 30 November 2018 (1Q FY19).

Financial highlights

Operating revenue for 1Q FY19 came in at S$254.3 million, down 1.7% compared to S$258.8 million seen a year ago. The fall was largely due to lower media sales, which declined by 6.8%.

SPH noted that the rate of decline in print ad revenue was the slowest seen in four quarters while revenue from digital ads saw double-digit growth of 12.9%. Overall digital revenue (which includes revenue from circulation, ads, online classifieds and other digital portals) improved by 10.1%.

The property segment’s revenue grew 11.1% to S$68.0 million mainly due to contribution from its UK student accommodation portfolio.

Meanwhile, revenue from others, which includes the aged care business, climbed 2.6% to S$24.2 million. The improvement was due to higher contribution from the online classifieds and education businesses.

Moving on, operating profit rose 7.6% to S$74.8 million largely due to lower operating expenses as a result of the absence of one-off retrenchment costs, which was incurred in 1Q FY18.

However, due to a decline in contribution from investments, net profit for the latest quarter tumbled 6.3% to S$57.9 million. SPH’s treasury and investment portfolio was partially divested by August 2018.

SPH’s balance sheet deteriorated for the reporting quarter. As of 30 November 2018, SPH had S$379.9 million in cash and cash equivalents, with S$1.84 billion in total debt. This translates to a net debt position of S$1.46 billion. In comparison, at the end of August 2018, the media giant had S$1.25 billion in net debt.

Looking ahead

SPH mentioned that its core media business is “focused on accelerating its digitisation efforts to capture growth opportunities while print continues to face industry headwinds”. As for its property business, it said:

“The Group recently invested in student accommodation assets in the UK and believes that the fundamentals remain positive. Demand for UK university education is expected to be sustained even after Brexit, as the UK is a popular destination for quality education for international students. An extensive deal pipeline is being actively reviewed as part of plans to build the portfolio to a more sizeable platform.”

On 28 December 2018, Singapore’s Info-communications Media Development Authority gave the green light for SPH and Keppel Corporation Limited (SGX: BN4) to take majority control of M1 Ltd (SGX: B2F).

SPH’s share price is at S$2.49 now. At that price, the company is selling at a trailing price-to-earnings ratio of around 15 with a dividend yield of 3.6%, without any special dividend.

$M1(B2F.SI) $Keppel Corp(BN4.SI) $SPH(T39.SI)

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What To Look For When SPH Releases Its Earnings Report
- Original Post from The Motley Fool Sg

Singapore Press Holdings Limited (SGX: T39) will release an earnings update for the three-month period from September to November 2018. The quarter also marks the start of a new financial year.

In its previous financial year, SPH recorded 4.8% lower revenue but operating profit remained stable. The media giant has been facing a challenging operating environment, mainly due to the proliferation of digital media and online news sources.

Here’s what investors should look out for when SPH releases its quarterly results on Friday.

Digital and print advertising revenue trends

Print advertising revenue declined double digit in the last financial year. Digital revenue, while up 13% from the previous year, still could not make up for the shortfall in traditional print revenue.

In the coming earnings release, investors should keep a close watch on both the print and digital revenue trends.

Can the company continue its strong momentum in growing its digital revenue stream? Will the growth in digital revenue finally make up for the declining print advertising revenue?

Property arm

The property segment remains the largest contributor to SPH operating profits. SPH owns a 70% stake in SPH REIT (SGX: SK6U), an interest in Chinatown Point, The Seletar Mall, and The Woodleigh Mall. In September 2018, SPH purchased a 3,436-bed portfolio of Purpose-Built Student Accommodation (PBSA) for S$321 million. Based on its acquisition price, management said that the investment will have a 6.3% capitalisation rate, which will provide additional rental income.

Investors should look out for any updates on how the new PBSA portfolio fared in the last quarter and its impact on the property segment’s bottom line.

Update on intention to purchase M1 Ltd (SGX: B2F) shares

Finally, SPH and Keppel Corporation Limited (SGX: BN4) announced their intention to make a voluntary general offer of S$2.06 per share for the remaining M1 shares that they do not yet own. SPH hopes to transform M1 and to leverage on M1’s mobile platform to offer on-demand and ready digital content.

SPH Management said that the transaction is earnings-accretive based on proforma historical performance.

In the upcoming earnings update, Investors should look out for any updates on this transaction and the detailed plans of how SPH plans to integrate M1’s platform into its business.

$M1(B2F.SI) $Keppel Corp(BN4.SI) $SPHREIT(SK6U.SI) $SPH(T39.SI)

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What Investors Should Know About Share Buybacks by Singapore-Listed Companies in 2018
- Original Post from The Motley Fool Sg

According to a recent report released by the Singapore Exchange, 32 companies bought back 97 million shares or units for a total amount of S$78 million in December 2018. For the full year, the total share buybacks amounted to S$1.5 billion.

The top ten companies with the most significant share buyback amounts in December were United Overseas Bank Ltd (SGX: U11), Keppel REIT (SGX: K71U), Oversea-Chinese Banking Corporation Limited (SGX: O39), Stamford Land Corporation Ltd (SGX: H07), Venture Corporation Ltd (SGX: V03), SingHaiyi Group Ltd (SGX: 5H0), SATS Ltd (SGX: S58), Singapore Post Limited (SGX: S08), Tuan Sing Holdings Limited (SGX: T24), and Sembcorp Industries Limited (SGX: U96).

Keppel REIT’s manager has been regularly buying back the REIT’s units since July 2018. As I noted in an earlier article here, Keppel REIT repurchasing its units could be a signal to the market that its units are selling below their intrinsic value. As of Friday’s close at S$1.15, Keppel REIT had a price-to-book ratio of 0.8 and a distribution yield of 4.9%.

2018 share repurchases

For the whole of 2018, the total share buybacks amounted to S$1.53 billion, with 100 companies conducting buybacks. The 2018 amount was triple that of 2017’s, which was at S$426 million. In 2018, Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI) tumbled 9.8%. But in 2017, the index rallied 18%. I note that with all things being equal, companies tend to repurchase more of their shares when the broad market is falling.

The 2018 share buyback was led by CapitaLand Limited (SGX: C31), DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation, United Overseas Bank, and Keppel Corporation Limited (SGX: BN4).

Straits Times Index components made up more than 80% of the 2018 share buyback amount. However, in the grand scheme of things, the combined buyback amount by the blue-chips was insignificant as it represented a mere 0.5% of their total market capitalisation, as of 31 December 2018.

The Foolish takeaway

Companies which repurchase their shares could hint to the market that their shares are undervalued. Share buybacks could also cosmetically enhance the earnings per share of companies since the outstanding share count is lowered. My Foolish colleague, Royston Yang, recently looked at other reasons why companies buy back their shares. You can click here to learn more.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which tracks the fundamentals of the Straits Times Index, was valued at a price-to-earnings ratio of 11.1 and had a distribution yield of 3.6% on 31 December 2018.

$STI(^STI.IN) $Keppel Corp(BN4.SI) $CapitaLand(C31.SI) $DBS(D05.SI) $STI ETF(ES3.SI) $Stamford Land(H07.SI) $Keppel Reit(K71U.SI) $OCBC Bank(O39.SI) $SingPost(S08.SI) $SATS(S58.SI) $Tuan Sing(T24.SI) $UOB(U11.SI) $Sembcorp Ind(U96.SI) $Venture(V03.SI)

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Keppel Corporation Limited Is Down More Than 30% In The Last 12 Months. Is It Cheap Now?
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments include offshore and marine, property, infrastructure, and investment.

At the current price of S$5.87, Keppel Corporation’s stock price is down more than 35% from its 52 weeks high of S$8.92. This raises a question: Is Keppel Corporation cheap now? This question is important because if the firm’s shares are cheap, it might be a good opportunity for investors.

Unfortunately there is no easy answer; However, we can get some insight by comparing Keppel Corporation’s current valuations with the market’s valuation. 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 Corporation currently has a PB ratio of 0.9, which is lower than the SPDR STI ETF’s PB ratio of 1.1. Also, the conglomerate’s dividend yield of 4.1% is higher than the market’s yield of 3.6%. The higher a stock’s yield is, the lower is its valuation. On the other hand, its PE ratio is higher than that of the SPDR STI ETF’s (32.0 vs 11.1).

In summary, we can argue that Keppel Corporation is priced at a discount to the market average due to its low PB ratio and high dividend yield, offset partially by its high PE ratio.

$STI(^STI.IN) $Keppel Corp(BN4.SI) $STI ETF(ES3.SI)

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