Hot stock: Keppel slides 7% after rigbuilding exit, pivot to clean energy

SHARES of Keppel Corporation sank to a two-month low on Friday after the conglomerate on Thursday unveiled a radical reboot to exit the rig business and pivot to clean energy.

The move came as the sting of the oil crash led Keppel Corp's offshore and marine unit Keppel Offshore & Marine (Keppel O&M) to post record losses of S$1.19 billion in 2020.

Keppel Corp sank to a low of S$5.06 on Friday, down 7.3 per cent or S$0.40 as at 11.43am, with 11.9 million shares changing hands. The last time the counter traded near this level was on Nov 18, 2020.

The drastic revamp will free up sickly Keppel O&M from "stranded" rig assets and provide it with a healthy balance sheet. With a robust net order book of S$3.3 billion - over 80 per cent of which is in renewables and gas solutions - the unit, it is hoped, will carry its weight for Keppel to meet its 15 per cent return on equity target that is being led by a 10-year roadmap called Vision 2030.

The Keppel O&M restructuring announcement also came alongside the group's second-half FY2020 results, where it recorded a net profit of S$31.3 million for its second-half ended Dec 31, 2020, down 91.1 per cent from a year ago on the back of decreased contributions across segments, with energy and environment hard-hit in particular.