Keppel shares up 6.1% on H1 earnings growth, share buyback and asset divestment plans
[SINGAPORE] Shares of Keppel rose on Thursday (Jul 31) morning after the asset manager posted a 24.2 per cent rise in H1 earnings, a S$500 million share buyback scheme and plans to divest S$14.4 billion of non-core assets.
As at 10.10 am, the counter was trading at a six-year high of S$8.68, with some 7.9 million shares changing hands. This was 6.1 per cent or S$0.50 higher than Wednesday’s closing price of S$8.18.
The last time it traded above this level was in 2018, based on ShareInvestor data.
It is also S$1.84 or 26.9 per cent higher than its closing price of S$6.84 on the last trading day of 2024.
Share buyback and H1 earnings growth
Keppel on Thursday posted a 24.2 per cent year-on-year rise in net profit to S$377.7 million for H1 amid higher contributions from its real estate segment.
The growth came even as its top line declined 5.2 per cent to S$3.1 billion. Revenue from the infrastructure segment was down 12 per cent at S$2 billion while revenue from the connectivity segment – which includes data centres and telco M1 – rose 13.9 per cent to S$742.4 million.
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The company also declared an interim dividend of S$0.15 per share, unchanged from the year-ago period, and a S$500 million share buyback programme.
Repurchased shares may be used to fund future mergers and acquisitions as well as the annual vesting of employee share plans, the company said.
Citi Research on Thursday maintained its “buy” rating for Keppel, with its S$9.38 target price at a 14.7 per cent premium above the counter’s Wednesday closing price.
The research house expects Keppel’s share buyback programme to be a “positive share price catalyst”.
The company’s planned divestment portfolio comprises legacy offshore and marine assets, residential landbank, selected property developments and investment properties, and S$2.9 billion of embedded cash and receivables. It also includes hospitality and logistics assets and other non-core investments.
The non-core assets are no longer aligned with Keppel’s asset-light, recurring income-focused strategy, even though many are profitable, such as residential landbanks carried at historical costs.
