Keppel share price in winter wonderland with Temasek Holdings

What an explosive revelation. Keppel share price stormed to high heaven on the back of a shocking partial offer by parent company, Temasek Holdings. Will Temasek Holdings do a CapitaLand, which was formed through a merger between Pidemco and DBS Land in 2000? Incidentally, the stunning move came right after Keppel achieved a massive breakthrough with Sete Brasil, which was forced to declare bankrupt over a corruption scandal in Brazil. The corruption scandal had caused Keppel to be fined a whopping $570 million by authorities, rupturing Keppel share price in the process.

Indeed, Keppel investors had every reason to be angry with the corruption scandal. On looking back, Keppel share price was actually recovering since the outbreak of the oil slump in 2014. From a low of $5.00 in 2016, Keppel share price actually soared to a high of $8.70 in early 2018. The massive fine meted out had thrashed Keppel share price left, right, centre. Since then, this counter never really see daylight. If Sembcorp Marine is found guilty as well, then Temasek Holdings could be faced with a total fine of nearly $1 billion of fine (inclusive of Keppel’s fine).

Keppel share price

The partial offer of $7.35 by Temasek for each Keppel share is akin to offering a cup of hot milo to investors stranded in a protracted winter because it represents a premium of 25.86% to the last traded Keppel share price as of 18 October 2019. But should investors jump for joy or punch the wall at the perceived low-ball partial offer? After all, Keppel share price was trading at $8.70 only in January 2018. For those who had bought into that false dawn, it is unlikely that they find the offer appealing, much less accept the offer. But let’s delve into what Temasek Holdings may be up to and how the unfolding event could shape Keppel share price in the coming months.

The intervention of Temasek Holdings should be a harbinger of things to come for Keppel. In February 2019, I wrote an article “Can Keppel share price meet the great expectations of Temasek Holdings?” In that article, I made the argument that Temasek Holdings should go for a “big bang” merger between Keppel and Sembcorp Marine to revive the ailing Keppel share price. It seems that the management of Temasek Holdings had finally decided to make the strategic move to restore sanity for Keppel share price.

Make no mistake. The bombshell announcement came straight after the multi-billion dollar settlement of the Sete Brasil in early October 2019 and the on-going corruption probe of Sembcorp Marine’s subsidiary by Brazilian authorities in July 2019. Against such a backdrop, Temasek Holdings could be plotting something special to preserve Keppel share price and Sembcorp Marine share price. But whether Temasek Holdings could pull this off really hinges on this partial offer.

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Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in this counter before. Whether Keppel share price surge or collapse will have no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Keppel share price and the M1 saga

First thing first. Temasek Holdings had indicated that they are not delisting Keppel Corp through this partial offer. So do not expect another M1 for this case. Nonetheless, it is interesting to note that Keppel Corp and SPH had joined force to privatize M1 in 2018. The 50% collapse in M1 share price had prompted Temasek Holdings, through Keppel and SPH, to intervene. Similarly, I believe the 50% collapse of Keppel share price since 2014 should have led to Temasek to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: October 25, 2019 — 3:24 am

3 Comments

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  1. Quite happy to see the jump. Recently accumulated some below $6 a couple of weeks ago and sold at $6.8x yesterday.

    Hi Gerald, Thanks for your article. Just wondering which stocks are in your portfolio, as you are not vested in so many stocks.

  2. Hi Leo,

    Congratulations! You seems to have a knack in picking winners in the stock market! Furthermore, under the current operating condition, it is not easy to make money from SGX stocks.

    Currently, I am not vested in any stocks. Incidentally, the last stock I held was K1 Ventures, one of the investment holding firms under Keppel Group. K1 Ventures had been privatized a few years ago. I had made some money from that counter but had not invested in any stocks since then because I had used up my funds to fund the purchase of my new home. Nevertheless, I am looking at entering Singtel in the coming months.

    Regards,
    Gerald
    https://sgwealthbuilder.com

  3. Thanks, Gerald, for your reply. I would say it was just luck this time round with regard to Keppel. Yes, it’s not easy to make money against the current backdrop of global economy and trade. However, if one is not greedy while patient enough, there is still some good opportunities out there. As far as I am concerned, I do trading occasionally just to earn some Kopi/Teh for lunch time.

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