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5 Quick Things Investors Should Learn About Keppel Corporation Limited

Keppel Corporation Limited (SGX: BN4) released its fiscal fourth-quarter earnings in late January. The earnings release contained a transcript of an address given by Chief Executive Officer Loh Chin Hua.

In that transcript, I had picked out some useful learning points about the firm’s offshore and marine (O&M) business which you can check out here. In addition, I had gleaned five other useful things from the transcript about Keppel Corp’s other business units.

As a brief introduction, Keppel Corp organizes its business into four different units: O&M; Infrastructure; Property; and Investments. With that, let’s look at what we can learn from the transcript:

  1. In his opening address, Loh had highlighted the slowdown in China’s economic growth. The middle kingdom’s GDP-growth had slowed to 6.8% in the fourth quarter of 2015. Despite this development, Keppel Corp’s experience has been positive in China. Loh noted that Keppel Land’s total residential sales volume in China was 3,280 units in 2015, up from 1,900 the year before. There could be more to look forward to as Keppel Land has about 20,000 launch-ready homes in its portfolio, mostly located in China.
  2. The Property segment contributed 46% of Keppel Corp’s 2015 net profit, providing valuable relief from the company’s troubles in the O&M sector. For the full year, Keppel Corp logged in S$1.53 billion in profit.
  3. For 2015, the Infrastructure segment achieved a major milestone with the merger of Keppel Infrastructure Trust (SGX: A7RU) with CitySpring Infrastructure Trust. The new trust, which includes Keppel Merlimau Cogen, is Singapore’s largest listed infrastructure business trust with total assets of over S$4 billion.
  4. Another potential contributor to Keppel Corp’s business in the future would be Keppel DC REIT (SGX: AJBU). Loh expressed his confidence that Keppel DC REIT would be a strategic contributor in the future, citing the example of Keppel REIT (SGX: K71U) that has grown into one of Singapore’s largest real estate investment trusts.
  5. Additionally, Keppel Corp currently has a sizable amount of debt. On top of that, the group also registered negative free cash flow for 2015. Loh stated that the conglomerate will be keeping a watchful eye on its gearing and cash flow. But at the same time, Loh also noted that 27% of Keppel Corp’s current earnings are deemed to be recurring in nature.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.