Keppel Corporation 1H22 Earnings Preview - CGS-CIMB Research 2022-07-18: Powered Up

Keppel Corporation 1H22 Earnings Preview - Powered Up

  • Keppel Corp (SGX:BN4) is due to announce its 1H22F results on 28 Jul. (See Earnings Calendar)
  • We forecast revenue of ~S$5bn (+35% y-o-y, flat h-o-h) despite uncertainties in the macro environment. Keppel Corp's 1H22F net profit could hover around S$440m, up 35% y-o-y but down 52% h-o-h; the latter due to lesser divestment gains.
  • We believe investors’ focus will be on Keppel Corp’s strategy post-completion of the SMM-Keppel O&M merger which we expect would be completed by end-2022F.
  • We think Keppel Corp’s infrastructure segment continued to be its key driver in 1H22F, buoyed by strong electricity and gas prices. We forecast 1H22F infra revenue at ~S$2.5bn, up 88% y-o-y and net profit at ~S$116m on the back of stronger margin from higher ASPs.
  • Keppel Corp’s offshore & marine (O&M) segment also likely saw narrowing losses on a business as usual (BAU) basis – we expect more work to have carried out as labour issues gradually ease. We estimate O&M revenue hit S$1.3bn in 1H22F (+65% y-o-y, +6% h-o-h) with the potential of positive EBIT and breakeven at net profit level.
  • Revaluation gains aside, we think the lockdowns in China likely resulted in continued weakness in home sale/completion. We estimate Keppel Corp's 1H22F urban development revenue to be weaker at ~S$420m (-54% y-o-y, -42% h-o-h) with S$165m net profit (-41% y-o-y, -66% h-o-h).
  • Our channel checks found that Keppel Land’s projects have not faced refusal of mortgage repayment issues. We expect asset management fee income to continue to grow as in 1Q22 (+70% y-o-y in fees to S$71m). We forecast S$135% net profit from Keppel Corp's asset management in 1H22F (+15% y-o-y, -27% h-o-h).
  • Keppel Corp's connectivity segment likely saw 1H22F net profit of S$33m (+21% y-o-y, -11% h-o-h) on the back of border reopenings.
  • We estimate Keppel Corp to have monetised ~S$500m of assets in 1H22 with an accumulated asset monetisation of S$3.5bn since Sep 2020 (S$5bn target by 2023).
  • Maintain ADD call on Keppel Corp with sum-of-parts target price of S$7.20.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LIM Siew Khee CGS-CIMB Research | 2022-07-18
SGX Stock Analyst Report ADD MAINTAIN ADD 7.200 SAME 7.200

Read also CGS-CIMB's most recent report:
2022-07-29 Keppel Corporation - Great Change Ahead

Target prices by 3 other brokers at Keppel Corp Target Prices.
Listing of broker reports at Keppel Corp Analyst Report.

Relevant links:
Keppel Corp Share Price History,
Keppel Corp Announcements,
Keppel Corp Dividends & Corp Actions,
Keppel Corp News Articles


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