*Keppel Corp; SMM trading halt*

*Keppel Corp will have an analyst call at 6pm this evening

*Our expectations was merger btwn Keppel O&M and SMM; ideally Keppel Corp divests its marine arm to SMM becoming a purer sustainability play.

*We could also see some write back for Keppel Corp in that case. Keppel O&M was around negative S$500m on book. After resegmentation and recapitalisation, which accounts for parent’s debt to fund S$1.2bn PERPs to keppel O&M as of end 2020.

We upgraded Keppel Corp to BUY in end Apr with $6.20 TP as we see value emerging. Stock fell off investors radar due to perception of lack of catalyst. We believe stock should rerate as recovery play and this merger news, if turns out to be our scenario will likely be positive for Keppel Corp