FW: SG: Keppel Corporation - Lowers interim dividend
Ye Tian (James)
22 Jul 2016
KEPPEL CORPORATION | HOLD
LOWERS INTERIM DIVIDEND
- Soft 2Q16 results
- Key overseas property markets healthy
- Lower interim dividend of S$0.08/share
Keppel Corp (KEP) reported a 37% YoY drop in revenue to S$1.6b and a 48% fall in net profit to S$205.8m in 1Q16, while 1H16 net profit fell 45%, mainly due to weaker results from O&M, and also the absence of one-time gains from the Infrastructure division a year ago. The impact was cushioned by good performance from the Property segment, which is now the biggest contributor to bottom-line. Overall, results were lower than expected, as 1H16 net profit accounted for 40% and 36% of ours and the street’s full year estimates, respectively. The Chinese property market remains healthy in the key cities where KEP operates, while on the offshore side, the group has received additional deferment requests. An interim dividend of S$0.08/share for 1H16 has been declared, compared to S$0.12/share in 1H15. We incorporate the recently-formed Keppel Capital into our sum-of-parts valuation, and also update our valuations for the O&M and property segments, such that our fair value estimate rises slightly to S$5.68. Maintain HOLD; we would turn buyers around S$5.30.
Low Pei Han, CFA
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