Keppel Corporation - CGS-CIMB Research 2022-07-29: Great Change Ahead

Keppel Corporation - Great Change Ahead

  • We are pleasantly surprised by Keppel Corp (SGX:BN4)'s S$0.15 dividend in 1H22 (vs. our expectation of S$0.12-0.13), despite a slower pace of monetisation (S$710m year-to-date). We take this as a sign of confidence and up our FY22F dividend to S$0.31 (historically, final dividend has been higher than interim) in view of Keppel Corp’s aggressive asset recycling strategy. This translates to a dividend yield of 4.7%.
  • Keppel Corp's 1H22 net profit including discontinued operations (O&M) of S$498m was 13% above our expectations, forming 58%/57% of our and Bloomberg consensus’ FY22F. Key surprises were stronger O&M profit of S$64m and fair value gains of start-ups such as Envision AESC Global, Fifth Wall, Vertex and Wavemaker, resulting in net profit of S$56m for corporate & others.
  • More than S$3.6bn of assets have been monetised since Keppel Corp commenced its asset monetisation programme in Oct 20, with ~S$2.9bn received in cash.
  • Asset management recorded S$155m in 1H22 net profit, reflecting 32% y-o-y growth but 16% h-o-h decline. Higher fee income and a greater share of fair value gains on investment properties and data centres contributed to the y-o-y increase. Asset management fees grew 14% y-o-y to S$126m. Keppel Capital has plans to launch new flagship funds such as the Keppel Core Infrastructure Fund and the Keppel Sustainable Urban Renewal Fund.
  • Current Keppel Corp's AUM stood at S$42bn with a target to grow to S$200bn if S$15bn capital is redeployed from asset monetisation over time.
  • We raise our SOP-based target price for Keppel Corp to S$9.37 to reflect asset-light strategy. Our target price largely comprises urban development (S$4.38), accretion from O&M divestment (S$1.79), asset management (S$2.52) and connectivity & infra at S$0.69/share.
  • We think in the next 3-5 years, Keppel Corp is on track to transform into a global asset manager with different asset classes in real estate, infra, data centres and alternative assets. Reiterate ADD.

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 | 2022-07-29
SGX Stock Analyst Report ADD MAINTAIN ADD 9.37 UP 7.200

Previous report by CGS-CIMB:
2022-07-18 Keppel Corporation 1H22 Earnings Preview - Powered Up

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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