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Can Keppel count on property and infrastructure for earnings support?

Benjamin Cher
Benjamin Cher10/24/2016 11:36 AM GMT+08  • 2 min read
Can Keppel count on property and infrastructure for earnings support?
SINGAPORE (Oct 24): Credit Suisse and Macquarie Research have rated Keppel Corporation “underperform” and “neutral” with target prices of $5.00 and $5.80 respectively as weak contribution from its offshore and marine business continues to be a dra
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SINGAPORE (Oct 24): Credit Suisse and Macquarie Research have rated Keppel Corporation “underperform” and “neutral” with target prices of $5.00 and $5.80 respectively as weak contribution from its offshore and marine business continues to be a drag on the 3Q earnings for the conglomerate.

Macquarie lead analyst Conrad Werner notes that O&M does not appear to have any sign of uplift as operating profit fell 72% to $49 million or 55% below forecasts. While headcount and salaries have been slashed, and yards may have to be mothballed to cut costs, Werner says these actions show the dire outlook of the industry and urges investors to be cautious.

In the property segment, Credit Suisse lead analyst Gerald Wong notes that the segment has been boosted by divestment gains. While property sales for Keppel Land remains flat in Singapore, sales in China and Vietnam remain strong. Keppel Capital has also received approval from the Monetary Authority of Singapore to centralise certain regulated activities, allowing it to start investing in real assets, Wong notes.

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