- We think investors will warm up to Keppel Corporation (SGX:BN4)’s transformation plans to become a global asset manager with the reorganisation of the group into three platforms:
- fund management platform,
- - Read this at SGinvestors.io -
- operating platform.
- These platforms span across three key business segments – infrastructure, real estate and connectivity.
What are the differences between Keppel’s current transformation plan and the previous one?
- See Keppel Corp's announcement dated 03 May 2023 for details of the transformation plan. We think the key differences between Keppel’s new reorganisation plan vs what was communicated previously are:
- - Read this at SGinvestors.io -
- steer investors’ perception away from viewing Keppel as a ‘property company’ as there are more than one asset class within the group to recycle capital from.
Can Keppel hit 15% ROE earlier than its 2030 target?
- We think Keppel’s cumulative asset monetisation target S$10bn-12bn by 2026 (S$4.9bn monetised since 2020) is achievable, and implies a further S$5bn-7bn worth of assets to be divested. Simplistically, an asset monetisation momentum of S$1.25bn-1.75bn p.a. seems feasible, in our view, as Keppel has done S$1.2bn-1.6bn p.a. since 2020.
- Keppel plans to double its asset under management (AUM) to S$100bn by 2026, and reach S$200bn AUM by 2030. It maintains its 15% ROE target by 2030F; we think it could achieve this by 2026F as Keppel plans to replace lumpy real estate development profits (FY21: S$177m) with income that are more recurring in nature.
- Keppel’s reorganisation as it grows its AUM could also reap synergy within the group, optimising support functions; Keppel expects this to lead to cost savings of S$60m-70m p.a. by 2026F.
S$10bn valuation for recurring income based on 15x FY23F P/E
- Read more at SGinvestors.io.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
LIM Siew Khee CGS-CIMB Research | Izabella TAN CGS-CIMB Research | https://www.cgs-cimb.com 2023-05-03
Read also CGS-CIMB's most recent report:
2024-02-01 Keppel - Infrastructure Powering Recurring Income.
Previous report by CGS-CIMB:
2023-11-29 Keppel Corporation - Making Headway Into Europe.
Price targets by other brokers at Keppel Corp Target Prices.
Listing of research reports at Keppel Corp Analyst Reports.
Relevant links:
Keppel Corp Share Price History,
Keppel Corp Announcements,
Keppel Corp Dividend Payout Dates & Corporate Actions,
Keppel Corp News
