Profits Up 20% At Keppel Corporation

Keppel logoThird-quarter revenues at Keppel Corporation (SGX: BN4) slipped 8.4% to S$2.95b, while profits increased 32% to S$457m.

The company’s Offshore & Marine division saw revenues fall 31% to S$1.54b compared to a year ago due to lower volume work.

The Infrastructure division – represented partially by majority-owned subsidiary Keppel Telecommunications & Transportation Limited (SGX: K11), which had a tough quarter recently – saw a jump in revenue of some 29% to S$877m. The growth was driven primarily by revenue contribution from a co-generation power plant in Singapore.

Keppel Corp’s Property division, which is partly made up by its subsidiaries Keppel Land Limited (SGX: K17) and Keppel REIT (SGX: K71U), was a notable bright spot as revenues almost doubled from S$226m a year ago to S$532m. That was due mainly to more homes being sold in China, even though Keppel Land complained about softer sales in Singapore. Both subsidiaries saw growth in their recent results as Keppel Land’s quarterly profits went up 70%, while distributions at Keppel REIT increased by 4.6%.

Keppel Corp’s pre-tax profits grew 34% to S$670m for the quarter. The Property and Infrastructure divisions helped to spur the company’s overall pre-tax profit growth. The corresponding figure for the former jumped 122% year-on-year to S$315m, while the latter’s pre-tax profits increased by 78% to S$48m.

The only blemish was the Offshore & Marine division, which saw pre-tax profit fall 11% year-on-year to S$282m due to lower revenues.

The company said it sees “good prospects for the Offshore & Marine industry arising from healthy rig demand.” In fact, the Offshore & Marine division’s net order book now stands at a record level of S$13.6b with deliveries extending into 2019.

The Infrastructure division is expected to grow its power & gas, environmental, and energy efficiency businesses. In particular, Keppel T&T will continue growing its logistics businesses and data centres portfolio.

In the property division, Keppel Land intends to “scale up in growth cities in its core markets of Singapore and China as well as strengthen its position in Vietnam and Indonesia.”

In addition, the subsidiary will continue growing its fund management business, which has seen assets under management increase from S$15.3b to S$17.3b.

At S$10.18, shares in Keppel Corp value the company at 10 times trailing earnings with a dividend yield of 7.1% based on last year’s pay-out.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.