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)

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The Week Ahead: Hang Onto Your Hats
- Original Post from The Motley Fool Sg

Singapore’s fourth-quarter earnings season kicks off with Singapore Press Holdings (SGX: T39) stepping into the spotlight on Monday.


In July, the publisher of The Straits Times said third-quarter profits jumped 64% to S$47 million. This was thanks to lower impairment charges that boosted operating profits. Meanwhile, SPH is focussing on acquiring cash-yielding real estate assets overseas.


SPH is also teaming up with Keppel Corporation (SGX: BN4), which also reports earnings next week, to buy Singapore’s smallest telecom company M1 (SGX: B2F). Keppel said in July that stronger earnings from its property and infrastructure divisions pushed up second-quarter profits by 44%. The industrial conglomerate added that the recent rise in oil prices has prompted growing optimism in the Offshore & Marine industry.


Singapore Exchange (SGX: S68) is pencilled in for quarterly numbers. The bourse operator reported a dip in profits for the fourth quarter. This was largely due to a jump in operating expenses because of legal fees incurred brought about by the interim injunction filed by the National Stock Exchange of India over derivatives trading.


On the economic front, US retail sales for September should provide some insights into the strength of the world’s largest economy. These are expected to show growth of around 5.2%, which would be slower than a year ago.


The FOMC minutes of the September interest-rate meeting could give some clues as to how many more rate hikes are in store. As it stands, policymakers see one more increase this year, three next year and just one in 2020.


China will report GDP numbers for the third quarter of 2018. This is expected to show a slight slowdown from 6.7% to 6.6%. The world’s second-largest economy will also report inflation numbers for September, which is expected to be unchanged at 2.3%. China could also announce a slight slowdown in September retail sales growth from 9% last year to 8.5% this time.


India’s inflation rate is also on the agenda next week. In August, wholesale prices rose by 4.5% year on year. It was the slowest rise since April as cost of fuel increased at a softer pace and food prices declined.


And finally, the earnings season in the US picks up speed next week with some potentially market-moving results from Bank of America (NYSE: BAC), Morgan Stanley (NYSE: MS), Johnson & Johnson (NYSE: JNJ), American Express (NYSE: AXP) and Procter & Gamble (NYSE: PG). Tech favourite Netflix (Nasdaq: NFLX) will also post quarter results. Hang onto your hats!


$Camsing Hc(BAC.SI) $JNJ $M1(B2F.SI) $Keppel Corp(BN4.SI) $SGX(S68.SI) $SPH(T39.SI)

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Institutional Investors Were Buying These 3 Shares In September
- 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 that were among the top 10 shares that saw the highest net purchases in dollar value by institutional investors in the month of September 2018. They are: M1 Ltd (SGX: B2F), Singapore Technologies Engineering Ltd (SGX: S63), and Sembcorp Industries Limited (SGX: U96).




Source: Singapore Exchange; SGX Stock Facts


The company with the highest net purchases in its shares by institutional investors last month was Singapore’s smallest operational telco, M1.In its 2018 second quarter earnings update, M1 reported that its revenue for the quarter was up 1.7 % year-on-year to S$253.2 million because of stronger performances in the Mobile Services and Fixed Services businesses that offset weaker performances from the International Call Services and Handset Sales businesses. M1’s higher revenue led to a 2.1% increase in net profit to S$37.2 million for the quarter.


In its latest earnings update, M1 also gave useful comments on the outlook for its business:


“M1 is committed to stay at the forefront of technology advancements and has embarked on early multivendor 5G trials, including Singapore’s first end-to-end 5G live trial in June 2018. This could provide insightful learning crucial to the successful development of relevant 5G services. With our foundation of dense cell grid and advanced narrow band Internet-of-Things network, we are well positioned to harness exciting new capabilities and support highly reliable and responsive applications on our network.


The Smart Nation initiatives will accelerate the digitalisation and transformation of businesses. By leveraging on our scaled up ICT and digital capabilities, we will be able to capture new opportunities from Smart Nation initiatives and support businesses to leverage digital technologies.


For the full-year 2018, we estimate capital expenditure to be around S$120 million. Based on current outlook and barring any unforeseen circumstances, we estimate second half profits to be lower in view of market seasonality and impending new competition.”


Investors may want to note that in late September, two of M1’s major shareholders –Keppel Corporation Limited (SGX: BN4) andSingapore Press Holdings Limited (SGX: T39)made a collective offer to acquire shares of M1 that they do not yet control.


The second company with significant institutional buying in September was Singapore Technologies Engineering Ltd (SGX: S63), or ST Engineering in short. As a quick introduction, ST Engineering is an engineering conglomerate with four distinct business segments, namely, Aerospace, Electronics, Land Systems, and Marine.


For 2018’s second quarter, ST Engineering experienced a 3.3% year-on-year decline in revenue to to S$1.65 billion. But, it managed to grow its profit attributable to shareholders for the quarter by 10.0% to S$117.5 million. All four of ST Engineering’s business segments, except Land Systems, posted an increase in profit.


The engineering conglomerate’s order book stood at S$13.4 billion at the end of 2018’s second quarter, flat sequentially, and a small decline from the S$13.5 billion seen a year ago. ST Engineering expects S$2.7 billion of its order book to be delivered for the rest of 2018. As of 30 June 2018, the company’s total debt stood at S$1.02 billion while its cash and investments stood at S$1.17 billion, giving it a net cash position of S$0.15 billion.


Here’s a succinct statement on ST Engineering’s prospects that the company shared in its latest earnings update:


The Aerospace and Electronics sectors delivered strong 2Q2018 earnings. The Group’s order book remained robust at $13.4b, contributed by new orders including those in the Smart City spaces. On the whole, the Group is tracking well on its strategy of strengthening the core as well as actively pursuing growth opportunities in defence exports and Smart City projects.


Last but not least, there’s Sembcorp Industries, a conglomerate with three major business segments: Utilities; Marine; and Urban Development. The Marine segment’s contribution comes mainly from Sembcorp Industries’ 61% stake in Sembcorp Marine Ltd (SGX: S51).


For the quarter ended 30 June 2018, Sembcorp Industries’ revenue improved by 46.6% year-on-year to S$3.34 billion. But, profit from operations for the quarter was down by 13% to S$192.1 million,with the Marine segment being the primary dragging force. Still, Sembcorp Industries’ net profit attributable to shareholders surged 46.8% year-on-year to S$81.9 million mainly because of lower finance costs, higher share of results of associates and joint ventures, lower tax expenses, and a significant decline in profit attributable to non-controlling interests (from a S$2.9 million profit to a loss of S$17.3 million). As of 30 June 2018, Sembcorp Industries’ net debt position stood at S$8.3 billion, up from S$7.3 billion in 2018’s first quarter.


Here’s a brief comment by Sembcorp Industries on its outlook:


“The market environment is expected to remain challenging in 2018. While a broader based global recovery is underway, rising trade and geopolitical challenges could potentially increase volatility and dampen global growth. The group is confident that it has the right strategies and capabilities for the future”


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.


$M1(B2F.SI) $Keppel Corp(BN4.SI) $Sembcorp Marine(S51.SI) $ST Engineering(S63.SI) $SPH(T39.SI) $Sembcorp Ind(U96.SI)

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

There are many ways to find investment ideas. Some useful ways 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 for the week ended 21 September 2018. They are: DBS Group Holdings Ltd (SGX: D05), Keppel Corporation Limited (SGX: BN4) and SembCorp Industries Limited (SGX: U96).



Source: SGX; SGX StockFacts (as of 21 September 2018)


The company with the highest net acquisition by institutional investors last week was our local bank DBS Group.


DBS continued its strong performance in 2018. For the second quarter ended 30 June 2018, DBS Group reported that total income increased by 10% from a year ago to S$3.20 billion. Net interest income (income from loans) rose 18% year-on-year to S$2.22 billion, driven by improvement in net interest margin and loan volume growth. Similarly, net fee income went north by 11% to S$ 706 million, led by growth in wealth management and cards. As a result, net profit jumped 20% to S$1.37 billion.


Also, DBS declared an interim dividend per share of 60 cents, up 82% from the 33 cents declared for the first half of 2017.


The second company with significant institutional buying last week was Keppel Corporation. As a quick background, Keppel is a conglomerate with major business segments such as Offshore and Marine, Property, Infrastructure, and Investment.


For the quarter ended 30 June 2018, Keppel reported that revenue was flat year-on-year at S$1.5 billion. Yet, net profit climbed 44% year-on-year to S$246.2 million. Earnings per share also rose 45% to 13.5 cents. Higher profitability was driven by strong performance in the Property and Infrastructure divisions.


In addition to the higher profitability, Keppel has improved its balance sheet with a net debt of S$4.9 billion, as at 30 June 2018, down from S$5.5 billion, as at 31 December 2017. As a result, its gearing declined to 0.4 times from 0.46 times. Moreover, the Offshore and Marine segment’s net order book (excluding Sete Brasil) grew from S$3.9 billion, as at 31 December 2017, to S$4.6 billion.


The last company on the list is Sembcorp Industries. As a quick introduction, Sembcorp Industries is a conglomerate with three major business segments: Utilities; Marine; and Urban Development & Others. The Marine segment’s contribution mainly comes from Sembcorp Industries’ 61% ownership stake in Sembcorp Marine Ltd (SGX: S51).


For the quarter ended 30 June 2018, Sembcorp Industries’ revenue improved by 47% year-on-year to S$3.34 billion. Yet, profit from operations for the quarter declined by 13% year-on-year to S$192.1 million, driven mainly by weaker performance in the Marine segment. Still, net profit attributable to shareholder jumped 47% year-on-year to S$82 million, mainly due to lower finance cost, higher share of associates and joint venture result and lower tax expenses. As of 30 June 2018, Sembcorp Industries’ net debt stood at S$ 8.3 billion, up from S$7.2 billion at end-2017.


Here’s a brief comment by Sembcorp Industries regarding its outlook:


“The market environment is expected to remain challenging in 2018. While a broader based global recovery is underway, rising trade and geopolitical challenges could potentially increase volatility and dampen global growth. The group is confident that it has the right strategies and capabilities for the future”


The Foolish conclusion


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) $DBS(D05.SI) $Sembcorp Marine(S51.SI) $Sembcorp Ind(U96.SI)

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Keppel Corporation Limited and Singapore Press Holdings Limited Seek Majority Control of M1 Ltd
- Original Post from The Motley Fool Sg

Keppel Corporation Limited (SGX: BN4), together with Singapore Press Holdings Limited (SGX: T39), wish to gain majority control of M1 Ltd (SGX: B2F) to drive business changes in M1 to enable the telco to compete more effectively in the telecommunications industry.


The offer will be made through a joint venture company, Konnectivity Pte Ltd. Keppel Corp holds an 80% stake in Konnectivity, with the remaining 20% in the hands of Singapore Press Holdings.


As of 26 September 2018, Keppel Corp, Singapore Press Holdings, and Keppel Telecommunications & Transportation Ltd (SGX: K11) collectively controlled 33.27% of M1. As of 5 March 2018, Keppel Corporation held 79.2% of Keppel Telecommunications & Transportation (Keppel T&T).


The offer price for M1 is set at S$2.06 per share, which gives the telco a price-to-earnings (PE) ratio of 14.3, and represents a 26% premium to the telco’s last traded share price of S$1.63 on 21 September.


The deal is subject to approval necessary from the Info-communications Media Development Authority (IMDA).


Rationale for the offer


By gaining majority control of M1, Keppel Corp and Singapore Press Holdings think that they would be able to undertake an extensive business transformation at the telco to deal with the fast-changing landscape and increasing competition in the Singapore telecommunications sector. The Australia-based TPG Telecom is set to be the fourth telco player in Singapore.


Loh Chin Hua, the chief executive of Keppel Corp, explained:


“Keppel and SPH have been long-term shareholders of M1 since the 1990s. Notwithstanding the challenges currently facing the industry, we see considerable potential in M1 and have developed a transformation plan to sharpen M1’s competitiveness. Through majority control, we would, together with SPH, be better able to support M1’s management to drive changes and create greater value in the company.


However, while we are confident about the long-term potential of M1, the transformation is a complex undertaking that will take several years. The Offer allows shareholders of M1 who are not prepared to wait and bear the related risks to realise their investment in M1 upfront.”


Privatisation of Keppel T&T


Keppel Corp has also announced a scheme of arrangement to privatise Keppel T&T in a cash offer at a price of S$1.91 per share. The takeover price is a 40% premium over Keppel T&T’s last traded price of S$1.36 on 21 September. Loh commented on the acquisition:


“The Scheme will similarly allow Keppel T&T’s minority shareholders, who may be concerned about the prospects of M1 in the face of heightened competition, to make a clean cash exit from Keppel T&T at a substantial premium.”


The scheme price values Keppel T&T at a PE ratio of 16.4.


$Keppel Corp(BN4.SI) $M1(B2F.SI) $Keppel Corp(BN4.SI) $Keppel T&T(K11.SI) $SPH(T39.SI)

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The Singapore Stock Market Today: Dairy Farm International Holdings Ltd Replaces StarHub Ltd on the Straits Times Index
- Original Post from The Motley Fool Sg

Hello, everyone. Here are three things about the local stock market that you might be interested in today.


1.The Straits Times Index (SGX: ^STI) inched up 1.5 points, or 0.05%, to 3,219.2. Of the 30 index stocks, 11 were in the green, 18 were in the red while one – ComfortDelGro Corporation Ltd (SGX: C52) – ended the day flat.


Thai Beverage Public Company Limited (SGX: Y92) was the best performer of the index as its shares rose 2.2% to S$0.695 each.


On the other hand, the company that was the biggest loser was Genting Singapore Ltd (SGX: G13). The casino operator’s shares fell 2.8% to S$1.04 apiece.


2. The Straits Times Index has a new look.


Pan-Asian retailer, Dairy Farm International Holdings Ltd (SGX D01), has replaced telco, StarHub Ltd (SGX CC3), on the 30-stock index. The change came after the September quarterly review of the Straits Times Index.


Dairy Farm shares ended the day at US$9.27 each, down around 1%, while StarHub shares rose 2.4% to S$1.71 apiece. For those who are interested to know about the firms’ dividends, you can jump in here.


3. Before the stock market opened today, Singapore Press Holdings Limited (SGX: T39) revealed that it has been approached by Keppel Corporation Limited (SGX: BN4) to participate in a possible transaction involving its indirect stake in M1 Ltd (SGX: B2F) held through its wholly-owned subsidiary, SPH Multimedia Pte Ltd. Keppel Corporation has anindirect interest in M1,which is the smallest listed telco in Singapore.


Keppel Corporation, on top of the news above, said that it is concurrently considering a transaction involving its stake in Keppel Telecommunications & Transportation Ltd (SGX: K11). As of 5 March 2018, Keppel Corporation had a 79.2% stake in Keppel Telecommunications & Transportation.


As of 22 February 2018, SPH Multimedia had a 13.45% stake in M1 while Keppel Telecommunications & Transportation owned 19.33% of M1. The largest single shareholder in the Singapore telco was Malaysia-listed, Axiata Group (6888.KL), with a 28.69% stake. Axiata has not made any announcement to the Malaysian stock exchange thus far.


Today, shares in Singapore Press Holdings Limited closed at S$2.80 apiece, down 0.7%, while Keppel Corporation lost 0.4% to S$7.00. Shares in M1 and Keppel Telecommunications & Transportation have been halted from trading.


$STI(^STI.IN) $M1(B2F.SI) $Keppel Corp(BN4.SI) $StarHub(CC3.SI) $DairyFarm USD(D01.SI) $Keppel T&T(K11.SI) $SPH(T39.SI)

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