Hot stock: Keppel, Sembmarine rise amid heavy trading after H1 results release

SHARES of BN4 and S51 : S51 0% rose amid heavy trading on Friday after both companies released their financial results on Thursday.

As at 9.07am, Keppel shares had risen S$0.13 or 2.4 per cent to S$5.52 after some 2.2 million shares changed hands. It later eased to trade at S$5.51, up 2.2 per cent or S$0.12 as at 10.58am.

Sembmarine shares also rose to a high of 11.4 Singapore cents as at 10.41am, up 3.7 per cent or 0.6 cent after some 48.1 million shares changed hands.

No married deals took place in early trade for both counters, according to ShareInvestor data.

Both companies announced financial results for the half-year period ended June 30.

Keppel announced that it returned to profitability on the back of positive contributions across most of its units, posting a net profit of S$299.8 million and reversing from a loss of S$537.1 million for the year-ago period. The company also raised its interim dividend to S$0.12 a share, four times the dividend in the previous year.

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CGS-CIMB analyst Lim Siew Khee said that she was "positively surprised" at the raised dividend and noted that it is the highest it has been since 2015. She predicts dividend per share for the company to be at S$0.25 for the full financial year and maintains "buy" with a raised target price of S$6.90 from S$6.40.

The analyst also liked that Keppel Infrastructure has new growth initiatives in the new energy division in areas such as energy storage, electric vehicle charging, liquefied hydrogen and green ammonia supply and noted that Keppel aims to grow its renewable energy assets to 7 gigawatts by 2030. 

DBS analyst Ho Pei Hwa also noted that Keppel's "stellar" results were evidence that the company's operational improvements are working.

She also regards the potential merger of Keppel Offshore and Marine with Sembmarine as a potential rerating catalyst as it streamlines Keppel’s operations to focus on its asset light businesses and other sustainable solutions. She maintains "buy" on the company with a target price of S$6.20. 

Meanwhile, Sembmarine posted a loss of S$647.2 million for H1 FY2021, widening from a loss of S$192.1 million for the same period a year before. However, company executives said that, barring unforeseen circumstances, they expect losses to narrow in the second half of the year.

Ms Lim said that Sembmarine has had to seek out skilled workers from countries like China and Malaysia to make up the shortfall of 4,000 workers it needs to operate at full capacity. 

"The inevitable staff cost provision is to ensure on-time delivery of projects on hand over the next six to 18 months,” she said, adding that this has led to inevitable staff cost provision to ensure projects are delivered on time in the next six to 18 months. 

While less provision should be required as the pressure eases in H2 FY2021, she noted that Sembmarine still may not revert to profitability then as the group still foresees insufficient revenues to cover fixed overheads and maintains "hold" on the company with a lowered target price of 9.3 cents from 22.6 cents. 

READ MORE: 

• Sembmarine flags liquidity issues in response to Sias queries about proposed S$1.5b rights issue
• Shades of Keppel's big 2020 O&M losses in Sembmarine's dour loss guidance for 2021
• Keppel, Sembmarine begin talks on merger of O&M operations