Keppel Corporation

Company description

With a global footprint in more than 20 countries, Keppel leverages its international network and resources to grow its key businesses in Offshore & Marine, Property, Infrastructure and Investments:

  • Keppel Offshore & Marine (Keppel O&M) is a global leader in offshore rig design, construction and repair, ship repair and conversion, and specialised shipbuilding. It integrates and harnesses the experience and expertise of 20 yards and offices worldwide to be near customers and markets.

  • Keppel Land is Asia's premier home developer. The company is also a leading prime office developer in Singapore, contributing to enhancing the city's skyline with landmark developments such as Marina Bay Financial Centre, Ocean Financial Centre and One Raffles Quay. Its other key markets are Asian cities such as Shanghai, Beijing and Tianjin in China, Ho Chi Minh City in Vietnam, Jakarta in Indonesia, Yangon in Myanmar and Manila in the Philippines.

  • Keppel Infrastructure (KI) drives the group's strategy to invest in, own and operate competitive energy and infrastructure solutions and services.

  • Keppel T&T is a leading service provider in the Asia-Pacific region and Europe with businesses in Logistics and Data Centres.

  • Finally, the Investments Division comprises the Group's asset management arm Keppel Capital, which includes the asset managers Keppel REIT Management, Alpha Investment Partners, Keppel Infrastructure Fund Management and Keppel DC REIT Management, as well as Keppel Urban Solutions, and the Group's investments in k1 Ventures, M1 Limited and KrisEnergy.

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. The group is well-positioned

to benefit from a recovery in the oil and gas sector besides enjoying a buoyant property market.

Infrastructure remains a steady contributor while Investments is expected to see gains from asset


Investment summary

  • Waiting for updates on Golar Gimi – Upstream recently reported that Golar LNG is evaluating alternative shipyards to build future FLNG vessels. Recall that in Jul 2014, Dec 2014 and Jul 2015, Golar LNG had contracted with Keppel to convert its existing vessels, Hilli, Gimi and Gandria into FLNG vessels. Hilli Episeyo has been delivered and is currently operating off Cameroon for Perenco, while Keppel had confirmed in Apr this year that it was in discussions with Golar on FLNG conversion projects for the BP Tortue field. This would likely require the use of Gimi, and the notice to proceed is till end this year. Golar had mentioned that other shipyards may offer “more attractive payment terms and long-term financing packages”, and that they “have confidence that a Chinese solution for FLNG is viable”. While there has been some market worry for Keppel, based on the transcripts by Golar, it appears that the discussion with non-Singaporean yards are based on using Golar’s Mark 2 design, i.e. for newbuilds. Keppel’s work, on the other hand, involves the conversion of vessels.

  • Second plot of SSTEC land sold in 2H18 – On the property side, it was disclosed last week that another plot of land in the Sino-Singapore Tianjin Eco-City (SSTEC) has been successfully bid for. The plot is meant for residential use, with a total site area of 8.77ha. This is the second plot of land sold in 2H18, and was won by Tianjin Yeshine Group at RMB 1.46b. This translates into about RMB 6,700 psm of GFA or RMB 166m/ha. Comparing the land price based on land area, the transacted land plot has fetched higher values than previous transactions. However, on a GFA basis, the price is lower (refer to table below). We do note that the pricing for each plot varies according to the characteristics such as location and access to amenities, amongst other factors.

  • Accretive acquisitions in the region at reasonable valuations seen in the future.

  • Keppel to benefit from rising oil prices.

  • Keppel to further benefit in property prices in key markets such as Singapore, China and Vietnam.

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