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Highlights From Keppel Corporation Limited’s 2018 First Quarter Results

Keppel Corporation Limited (SGX:BN4) is a conglomerate with four major business segments: Offshore & Marine, which includes the construction of offshore production and drilling rigs;  Property, which involves both real estate development and investing; Infrastructure; and Investment.

Last Thursday, Keppel Corp released its results for the first quarter of 2018. Here are 10 takeaways:

1. Revenue for the quarter jumped 17.8% to S$1.47 billion from S$1.25 billion a year ago. Consequently, net profit attributable to shareholders increased to S$337.5 million, up 33.7% from S$252.5 million a year ago. Likewise, earnings per share grew 33.8% to 18.6 cents from 13.9 cents a year ago.

2. The bulk of the growth in Keppel Corp’s net profit was from its Property division, which recorded a net profit of S$378 million, up significantly from S$95 million the previous year. This was largely due to the divestment of Keppel Cove in Zhongshan for a net gain of S$289 million. The Property division also secured 300 home sales for a total value of S$290 million during the quarter. Keppel Corp still has a landbank that could potentially build 61,000 homes, of which 16,000 are launch-ready.

3. The other three divisions did not fare so well during the quarter. Offshore & Marine reported a net loss of S$23 million, but it did secure S$580 million worth of new contracts over the quarter, growing its net order book to S$4.3 billion from S$3.9 billion at the end of 2017.

4. The Infrastructure segment saw its net profit decline 19% year-on-year to S$26 million.

5. The Investment segment suffered a net loss of S$44 million, reversing the profit of S$125 million seen in 2017’s first quarter.

6. In the first quarter of 2018, Keppel Corp’s management highlighted that the conglomerate added S$186 million in economic value, and achieved an annualised return on equity of 11.4%.

7. As of 31 March 2018, Keppel Corporation had total shareholders’ equity of S$12.1 billion, up from S$12.0 billion at the end of 2017; its net asset value per share, subsequently, rose 1.6% to S$6.39 from S$6.29. With a cash hoard of S$2.7 billion and total loans of S$7.86 billion, the conglomerate had a net debt position of S$5.1 billion, a slight improvement from the net debt of S$5.5 billion seen at the end of 2017. Keppel Corp also improved its gearing ratio from 0.46 at end-2017 to 0.42.

8. Operating cash flow was negative S$10 million in the reporting quarter. Together with the net cash generated from investments of S$271 million, Keppel Corp generated S$261 million in free cash flow. In comparison, the conglomerate had negative free cash flow of S$62 million in 2017’s first quarter.

9. On Keppel Corp’s prospects for the rest of the year, the company’s CEO, Loh Chin Hua said:

“Markets have been roiled in recent weeks by concerns over rising trade tensions between the US and China as well as the situation in the Middle East. However, the global economy continues to enjoy broad-based growth, with improved business sentiments in both advanced economies and emerging markets. Strong urbanisation trends continue to present many opportunities for the Keppel Group across our businesses.”

10. At the time of writing, Keppel Corp trades at S$8.32 per share. This translates to a price-to-book ratio of 1.30, an annualised price-to-earnings ratio of 11.18, and a trailing dividend yield of 2.64%.

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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 Jeremy Chia owns shares in Keppel Corporation Limited.