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Profits fell by 39% year-on-year due to last year’s en bloc sales.
Keppel Corporation Limited posted a net profit of $356 million for the first half of 2019, down 39 percent year-on-year due to the high-base effect of 1H 2018, which witnessed significant contributions from the collective sales of its property projects, revealed a UOB Kay Hian report.
The highlights came from the property and infrastructure business segments, both of which face robust revenue and business outlooks.
The infrastructure segment, for instance, registered a 17 percent year-on-year increase in revenue. UOB Kay Hian expects this strength to continue due to the company’s power and gas businesses.
Keppel Corp’s property projects in China remained robust, boding well for the company’s outlook considering that this segment accounted for almost 60 percent of its operating profit in 1H 2019.
UOB Kay Hian noted that Keppel Corp’s net gearing stood at 0.82x as at end-June and management expects this to grow in the near to medium term on the back of working capital needs from its oil and marine segment as well as the property division.
“From a loss of $46m in 1H 2018, Keppel Corp’s investments division generated a net profit of $25 million in 1H 2019 which was spearheaded by stronger earnings from Keppel Capital as well as higher contributions from M1 post its acquisition in 1Q19,” it noted.
“The profit was slightly offset by higher interest expense and amortisation as a result of the acquisition, the latter impacting the company in the coming quarters, on our estimates.”
With this, UOB Kay Hian maintained its earnings forecasts for the company.
“We resume coverage of Keppel Corp with a BUY rating and a target price of $7.61 based on our sum-of-the-parts valuation. Together with a forecast dividend yield of 3.4 percent for end-2019, we project a total 12-month return of 18.9 percent vs the current share price level.”
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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