Brokers’ take: Keppel H1 DPS a surprise; CGS-CIMB, OCBC reiterate ‘add’ and ‘buy’
Yong Hui Ting
BOTH CGS-CIMB and OCBC were surprised by Keppel’s strong set of results, particularly as the conglomerate posted a higher-than-expected dividend per share of S$0.15 in its H1 2022 results.
CGS-CIMB on Friday (Jul 29) reiterated its “add” call on the group, positive on the company’s future based on its asset-light urban development strategy and post-offshore and marine divestment as it raised the target price to S$9.37 from its earlier S$7.20.
Analyst Lim Siew Khee noted that the group’s H1 2022 net profit of S$498 million comes in 13 per cent higher than the brokerage’s estimates, making up 58 per cent of CGS-CIMB and 57 per cent of Bloomberg’s consensus estimates for the full year forecast.
Key surprises for the brokerage also came from a stronger offshore and marine profit of S$64m and fair value gains of startups such as Envision AESC Global, Fifth Wall, Vertex and Wavemaker — resulting in net profit of S$56m for corporate and others in its accounting sheet.
Lim also took guidance from Keppel’s higher dividends — a 62 per cent payout on its H1 earnings per share — and raised her full-year dividend expectation to S$0.31, keeping in view its “aggressive asset recycling strategy”.
The FY2022 dividend expectation is similarly echoed by analysts at OCBC, who raised their FY2022 forecasts from S$0.26 per share.
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OCBC also reiterated its “buy” call on the stock, with an unchanged fair value estimate of S$8.78 in its report published on Friday.
The research team also bodes well on Keppel’s environmental, social and governance (ESG) indicators.
“The group fares well in labour management, health and safety, governance and opportunities in clean tech,” said OCBC researchers.
“It is quite rare to find a company in the Singapore Industrials space; the other under our coverage is Singapore Post,” they added.
OCBC further foresees upside catalysts from accretive acquisitions in the region at reasonable valuation multiples, successful monetisations of undervalued assets and a recovery in property prices in key markets Singapore, China and Vietnam.
“We think in the next 3-5 years, Keppel is on track to transform into a global asset manager with different asset classes in real estate, infrastructure, data centres and alternative assets,” said CGS-CIMB’s Lim.
Shares of Keppel traded 1.5 per cent higher or S$0.10 at S$6.87 as at 2.22 pm on Friday.
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