Rating BUY (as at 25 June 2021)
Last Close SGD 5.11
Fair Value SGD 6.33

Long-awaited merger of O&M

• KEP and SMM entered into non-binding MOU with a view to combine Keppel O&M and Sembcorp Marine
• Terms of combination still being discussed; may take several months
• KEP intends to distribute to its shareholders all the Combined Entity shares ultimately

Investment thesis

Keppel Corporation’s multi-business strategy shone when the property business continued to support earnings despite a downturn in the offshore marine segment. Infrastructure remains a steady contributor while Investments is expected to see gains from asset disposals. Management has reaffirmed its Vision 2030 strategy and identified assets with a total carrying value of SGD17.5b that can potentially be monetised over time and channelled towards growth initiatives. Over SGD3-5b of this would be monetised over the next three years. Meanwhile the group will exit its offshore rig building business.