Latest news with #HoPeiHwa
Business Times
6 days ago
- Business
- Business Times
‘New Keppel' shows promise; M1 sale and green projects could stir more excitement
[SINGAPORE] Once the world's largest offshore rig builder, Keppel is doubling down on efforts to transform into an asset manager – most recently with its plans to divest a S$14.4 billion portfolio of non-core assets . The move carries the promise of a more streamlined focus and resilient earnings growth. Further catalysts that investors can look out for include the potential sale of M1's consumer mobile business, as well as Keppel's green energy projects, riding on the momentum of the Asean power grid. But whether investors will eventually re-rate Keppel to trade at the richer valuations of global asset managers – such as KKR and Blackstone – remains to be seen. In its latest earnings on Jul 31, Keppel announced that it will 'substantially' monetise a portfolio of non-core assets by 2030. The portfolio includes legacy offshore and marine assets, residential land bank, certain property developments and S$2.9 billion of embedded cash and receivables. The market is certainly upbeat. News of the divestment, coupled with a S$500 million share buyback, lifted Keppel's share price to a six-year high on Jul 31. At least 10 analysts now have 'buy' calls on Keppel, of whom seven have upgraded target prices in the past week. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up DBS Group Research analyst Ho Pei Hwa said that Keppel offers a 'unique and unrivalled proposition as a global asset manager', and upgraded her target price to S$10, from S$9 previously. She projects an 8 per cent compound annual growth rate for core earnings over the next two years, while noting that the company looks set to hit its target of S$100 billion in funds under management ahead of the 2026 deadline. Phillip Capital's research head Paul Chew expects an 'earnings spurt' over the next two to three years. He sees growth in 2026 being driven by three projects: real estate development Keppel South Central, the Keppel Sakra Cogen power plant and the Bifrost Cable System, with subsea cables that connect Singapore directly to North America. Potential M1 sale In the near term, there are other catalysts that investors can look out for. One is the potential sale of telco M1's consumer business, which Keppel chief executive Loh Chin Hua indicated the company remains open to, during an earnings briefing on Jul 31. Such a sale is likely to cheer the market. CGS International analysts estimate M1's consumer business to be worth between S$700 million and S$900 million, and see its divestment as a potential re-rating catalyst. Chatter about the sale of M1 has been long ongoing, with fresh talk about a potential merger with StarHub surfacing last year. The telco market is 'overcrowded', with four operators and about seven mobile virtual network operators, noted Manjot Singh Mann, the CEO of Keppel's connectivity segment, at the briefing. Many SIM-only plans are replacing contract plans, diluting average revenue per user across the industry. Consolidation may then be only a matter of time, and a fruition of long-held expectations would certainly be a positive. At the same time, Keppel stands to benefit from retaining M1's enterprise business, which complements its data centres. '(We) do see a lot of organisations digitalising their businesses and looking for either hybrid cloud or multi-cloud solutions. So, that is where we do see synergy between our enterprise business and our data centre business,' said Mann. Asean grid opportunities Another catalyst that investors can look out for is Keppel's efforts to import renewable energy and contribute to the building of an Asean power grid, even amid the US-led backlash on green projects and the threat of tariffs. A significant tailwind is Singapore's plans to import 6 gigawatts (GW) of low-carbon electricity by 2035. Keppel already has two projects contributing to this effort. In 2023, its unit Keppel Energy secured conditional approval from Singapore's energy authority to import 1 GW of clean energy from Cambodia. Last year, Keppel Energy also secured a conditional licence to import 300 megawatts (MW) of solar power from Indonesia. A conditional approval and conditional licence are the first and second steps, respectively, towards obtaining a full licence for energy import projects. With the two projects, Keppel has unlocked 'very large-scale' opportunities, said Cindy Lim, CEO of the infrastructure business, on Jul 31. For instance, the 300 MW Indonesia project translates to an upstream generation capacity of about 2 to 2.5 GW of photovoltaic systems, as well as 5 gigawatt-hours of battery energy storage. 'The opportunities for an Asean power grid are very promising... We see Keppel as a front runner in this regard, and we will be playing our part to work with regulatory authorities across Asean, as well as with agencies in Singapore, to make this happen,' noted Lim. Keppel is also building Singapore's first hydrogen-compatible power plant: the 600 MW Keppel Sakra Cogen Plant on Jurong Island, which is set to commence operations in the first half of 2026. Lim disclosed that Keppel may 'give a positive surprise' by bringing the Sakra plant onstream earlier. The plant will expand the company's generation capacity by nearly 50 per cent, from 1.3 GW to 1.9 GW. These projects could lift Keppel's infrastructure division, which saw a 12 per cent fall in revenue to S$2 billion for the first half of 2025, due to lower net generation in the integrated power business. The segment's net profit was down 4.9 per cent, at S$346.6 million. CGS International sees infrastructure as the 'clear driver' for 'New Keppel'. To be sure, Keppel's green power efforts come in the face of significant headwinds. Global sentiment on renewable energy has cooled, with the US doubling down on oil and gas. Tariffs remain another big wild card in this business. That said, South-east Asia's march towards renewable energy has been undeniable, with the improving economics of solar energy and the clear need for energy security. Keppel's ability to ride this trend could prove to be a long-term growth catalyst. Valuation boost? At the earnings briefing on Jul 31, Loh suggested that Keppel could be compared to global asset managers KKR, Brookfield, BlackRock and Blackstone. He also expressed hope for a re-rating of the stock. 'As we accelerate the growth of 'New Keppel', we expect that the market will re-rate our stock price and accord us a growth multiple,' he said. It will be worth observing if the current market bullishness translates to richer valuations over time. Keppel now trades at 17.2 times earnings – still some way behind BlackRock, which trades at 27 times earnings, Blackstone at 44.9 times and KKR at 65.1 times. Whether investors will value Keppel at the levels of these asset management giants could depend on the pace and execution of the non-core asset divestments.
Straits Times
21-04-2025
- Business
- Straits Times
Yangzijiang Shipbuilding shares up as US eases proposed port fees on China-built vessels
An aerial view of the Port of Oakland on April 18. The US has eased on its initial proposal of imposing port fees and curbs on China-built vessels. PHOTO: AFP Yangzijiang Shipbuilding shares up as US eases proposed port fees on China-built vessels SINGAPORE - Shares of mainboard-listed Yangzijiang Shipbuilding surged on April 21, after the United States eased on its initial proposal of imposing port fees and curbs on China-built vessels. The counter was trading at $2.24, up 8.7 per cent as at 3.30pm on April 21, but remains 32.1 per cent below its 52-week high of $3.30 in February. It closed 19 cents, or 9.2 per cent, higher at $2.25 on April 21. While the easing of port fees have stabilised Yangzijiang's share price, analysts told The Straits Times that the effects of a global trade slowdown could still dampen its growth. The company saw its share price sink in February, after the US Trade Representative Office (USTR) laid out proposed fees and other shipping restrictions on Chinese vessels. These include port entrance fees of up to US$1 million (S$1.31 million) per vessel owned by Chinese maritime transport operators, or a US$1,000 charge per net ton on the vessel's cargo capacity. But the USTR softened its stance on April 17, deciding not to impose fees based on the percentage of Chinese-built ships in a fleet or future Chinese ship orders. The new fees will be applied once per voyage, up to six times a year. US exporters and vessel owners using China-built vessels to service the Great Lakes, the Caribbean and US territories will also be exempt from port fees. Still, Chinese-built and owned ships will incur a fee of US$50 per net ton from Oct 14, with annual increases of US$30 per ton over the next three years. This fee will apply if it exceeds an alternative calculation method, which charges US$120 per container discharged, rising to US$250 over the same period. Chinese-built ships owned by non-Chinese firms will face a fee of US$18 per net ton, with annual increases of US$5. Mr Paul Chew, head of research at Phillip Securities Research, said the latest move by the US authorities cleared the uncertainty around Yangzijang's share price, which had been weighed down by concerns that the potential fees could be more punitive. 'The larger worry now for the container industry will be the collapse in volumes and possibly rates between the US and China routes,' he said. 'Despite the relief rally, we have worries that the container ship ordering cycle for Yangzijiang will be under pressure from the slowdown in global trade.' Ms Ho Pei Hwa, DBS Bank senior vice-president of equity research, noted that Yangzijiang has a 'wide economic moat' to weather through near-term uncertainties and potential structural shifts. She said: 'The more manageable port fees and increased flexibility for shipping companies and shipbuilders should help ease concerns about cancellations of Chinese shipbuilding orders and future demand. 'We maintain a 'buy' rating and a target price of $3.80 for Yanzijiang.' Mr Isaac Lim, chief market strategist at digital trading platform Moomoo, noted that Yangzijiang has been consistently buying back shares since early April, having repurchased about 15 million shares so far. 'Such consistent actions are typically interpreted by the market as a sign that the company expects stronger growth in the future,' he said. 'Its share price could well reach $2.85 over the next two months and even test its historical high at $3.32 by the end of the third quarter of 2025.' Yangzijiang Shipbuilding is one of the largest non-state-owned shipbuilding companies in China. It runs four shipyards in Jiangsu province, producing a range of vessels including oil tankers, bulk carriers and liquefied natural gas carriers. In March, the firm acquired a 34 per cent stake in a wholly owned subsidiary of Japanese shipyard Tsuneishi Group for 833.1 million yuan (S$149 million). The company has an order book valued at around US$22 billion, according to a bourse filing in November 2024. A Straits Times Index component and considered a blue-chip stock, the company was among the top picks by institutional investors on the Singapore Exchange in 2024. On Feb 26, Yangzijiang Shipbuilding reported a 50.5 per cent year-on-year jump in net profit to 3.6 billion yuan for the second half of the year ended Dec 31, 2024. For the full year, it reported a net profit of 6.6 billion yuan, up 61.7 per cent from 4.1 billion yuan a year prior. Join ST's Telegram channel and get the latest breaking news delivered to you.
