Potential O&M merger with SembMarine & divestment to drive company re-rating
SINGAPORE | CONGLOMERATE | UPDATE
Group takes another step toward final resolution for Keppel O&M.
Keppel to potentially receive up to S$500mn for its O&M legacy assets, which will be monetised over time.
Proposed transactions, if successful, will allow investors to benefit from merged entity’s revenue and cost synergies.
Maintain BUY with higher SOTP TP of S$6.20 from S$6.12 as we believe the better clarity on its O&M division should narrow the O&M divisions discount to its book value, with a 10% holding-company discount. Our TP translate to about 1.0x FY21e book value, a slight discount to its 5-year average of 1.05x. Catalysts expected from contract wins and a successful resolution to its O&M unit.