National Day Special Offer! On 2 August 2021, Keppel Corp stunned Singapore investment community with the announcement of the $2.2 billion strategic acquisition of Singapore Press Holdings ex-Media. Whilst the media segment had been carved out, the destiny of the remaining assets of SPH remained a mystery until the fateful announcement. Will the latest turn of event throw a spanner in the works for the recovery of Keppel Corp share price?
Keppel Corp share price turned on the style following report of a net profit amounting to $300 million for half year ended 30 June 2021. Notwithstanding the strong results, what truly turbocharged Keppel Corp share price was the surprising bonanza cash dividend of 12.0 cents, which is significantly higher than 2020’s interim dividend of 3.0 cents and also higher than the interim dividend of 8.0 cents declared in 2019.
With the proposed acquisition of SPH ex-Media, it is evident that Keppel Corp management is very determined to execute one of its much-touted Vision 2030 – recycling of assets to generate cash. The biggest components of Vision 2030 are to become asset-lite and pivot in renewable energy sector. To do so, Keppel Corp needs a mega asset monetization programme. The monetization initiative is well-underway but the assets from SPH is going to provide more platform for recycling. Hence, I do think that in the next few months, Keppel Corp share price will stay bullish.
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. I am not vested in Keppel Corp at the moment. Whether Keppel Corp share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Keppel Corp share price in whole new world
Indeed, it has been an absolute bitter-sweet moment for investors as Keppel Corp share price endured one of the most volatile chapters in its operating history. Major shareholder, Temasek Holdings, had a hand in it when it invoked the pre-condition of material adverse change in Keppel Corp’s financial performance and walked away from the partial offer deal in 2020. That epic move led to a calamity for Keppel Corp share price, which plunged to $4.10 on 25 September 2020. That was the lowest point for Keppel Corp share price in the past decade and inadvertently led to a temporary crisis of confidence in Keppel Corp share price.
Investors who kept faith with the management were duly rewarded as Keppel Corp share price swiftly recovered from that disaster. Yet, enter 2021, investors were treated to more volatility of Keppel Corp share price when the Group announced full-year losses amounting to $508 million. The losses were largely attributed to the $952 million of impairments, mainly from the Offshore & Marine business. Arising from this, investors wasted no time punishing this counter as Keppel Corp share price spiraled out of control, falling from $5.40 to $5.00 on 29 January 2021.
Perhaps to quickly salvage Keppel Corp share price, the management announced the decision to exit the oil-rig building business in January 2021. Then in June 2021, Keppel announced the signing of non-binding MOU with Sembcorp Marine with a view of combining Keppel Offshore & Marine (KOM) and Sembcorp Marine. Under the deal, KOM will be merged with Sembcorp Marine to form a listed company. In addition, Keppel will receive shares in the listed entity and a cash consideration of up to $500 million.
The 12 cents dividend, coupled with the listed entity shares and $500 million cash, will form strong catalysts for Keppel Group share price all the way till the end of the financial year. In my opinion, I do think that $7 could be the next attainable milestone for Keppel share price in 2021. Previously, my forecast is that Keppel Corp share price could hit [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.]National Day Special Offer!
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