I am a shareholder of Keppel Corporation Limited (SGX: BN4).
Earlier today, the company had released a deck of slides that were meant as part of a presentation to investors in Hong Kong. But as I studied it, I have to admit I am starting to worry about the company.
Touting its strengths
Keppel Corp has long presented itself as a key player in the offshore & marine sector.
In the past, the company had focused on its proprietary oil rig designs and had been promoting its “Near market, near customer” approach. But, it appears that Keppel Corp is trying to sing a different tune now.
As I looked through Keppel Corp’s latest presentation, I could not help but notice something. Throughout the presentation, it had hardly touched on its “strong” position in the oil & gas sector and its “Near market, near customer” strategy.
Even when the company had slides on its core strengths, the words used were “Gas value chain.” What’s notable here is the absence of an all too common prefix that comes with the word ‘gas’ when used in the context of business – ‘oil’.
Let me compare Keppel Corp’s latest investor presentation with one it gave back in 2012.
Back in those days
In the 2012 presentation, the company clearly stated at the begining that its three core lines of businesses were: Offshore & Marine; Infrastructure; and Property
Source: Keppel Corp 2012 investor presentation
The company then went on to showcase each business segment, starting with its massive order book in its offshore & marine sector, its key “Near market, near customer” strategy, and proprietary oil rig designs.
The presentation then moved on to its Infrastructure segment and ended up with the Property segment.
How today looks like
But in the latest August 2016 presentation, Keppel Corp kicked it off with a slide titled “Harnessing strengths” and shared the synergies that can be achieved across its various business segments.
The company then went on about “Scaling the value chain” and “Creating & capturing sustainable value.” Keppel Corp also spent time on its fund management business, its multi-business strategy, and how it has stayed resilient throughout business cycles over the past decade, including the recent oil price collapse.
What worries me as a shareholder
As I said earlier, I am a shareholder of Keppel Corp and I am starting to worry about the company.
I’m beginning to worry not because of the decline of its oil and gas business. I’m beginning to worry not because the share price of Keppel Corp is suffering.
I have developed roots of worry because my impression from the recent investor presentation is that the company seems to me to have lost its direction. In my eyes, Keppel Corp no longer knows what its key businesses are. Instead, its focus is now on talk about “creating values” and finding “synergy.” Compared to the straightforward pitch in 2012, the presentation today left me with a sense of doubt.
The oil industry is struggling – everybody knows that. Being in an industry that is currently in a deep recession is no shame. I would rather Keppel Corp come out and be honest about the troubles it is facing, the worst-case scenarios investors should expect, how it can bounce back as a company in the future, and how it could prevent hardship going forward.
Yet, there was a complete disregard and lack of mention of the troubles it is currently facing in its latest investor presentation. This made me feel that there could be so much more bad news that I am not aware of with the company. I do hope Keppel Corp can open up more about its business in the future.
I, as a shareholder, am ready to face the downturn and weather through the storm. I’m sure there are many other shareholders like me out there. Keppel Corp needs to let us know it is ready as well.
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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 writer Stanley Lim owns shares in Keppel Corporation.