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Keppel Corp resumes share buyback, associate KrisEnergy seeks court protection

Uma Devi
Uma Devi8/23/2019 06:30 AM GMT+08  • 3 min read
Keppel Corp resumes share buyback, associate KrisEnergy seeks court protection
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(Aug 26): Keppel Corp made a series of share buybacks in the past week, at prices ranging between $5.90 and $5.96. According to a Singapore Exchange filing dated Aug 15, Keppel spent $2.3 million to buy 390,000 shares, at an average price of $5.90. One day later, the company bought an additional 270,000 shares for a total price of $1.6 million, or an average price of $5.93. On Aug 19, another 110,000 shares were purchased, at a higher average price of $5.96.

According to SGX filings, Keppel’s last share buyback was on July 24 last year, when it bought 189,000 shares at $6.88 each. With the Aug 19 purchase, Keppel has bought back a total of 770,000 shares allowed under the current mandate for share buybacks. It now holds nearly 2.04 million treasury shares, and has a total share base of nearly 1.82 billion shares.

Keppel’s most recent share buybacks were done around the same time its associate company, upstream oil and gas firm KrisEnergy, filed an application for a debt moratorium to seek court protection from creditors’ actions as the company works on restructuring its debt amounting to some US$477 million ($660 million).

Apart from owning 30% of shares in KrisEnergy, Keppel is a lender to the associate company as well. On July 18, Keppel had reported a total direct investment of $131 million in KrisEnergy, in the form of zero coupon notes, warrants and equity.

Keppel is a conglomerate with diversified interests ranging from offshore and marine to property, infrastructure and asset management. In recent years, its core offshore and marine business has suffered from the prolonged industry slump, as oil prices remain far from the peak of more than US$100 per barrel a decade ago.

On July 17, the company reported 1HFY2019 earnings of $356 million, down 39% compared with the year-earlier period. The offshore and marine division reported earnings of $10 million for 1H, compared with losses of $40 million in the year-earlier period. Year to date, the company has secured contracts worth $1.9 billion, which has already exceeded orders of $1.7 billion for the whole of 2018. Segmentally, the company’s order book for the offshore and marine division, as at end-June, is about $5.5 billion — the highest level since 2016. The company says it has started gaining traction in a new segment of offshore wind power generation, with some $720 million worth of contracts won in 2QFY2019.

See also: Sakae Holdings clarifies share buy-back purchase price on Oct 27 was CFO's mistake

As the offshore and marine business struggles to recover, Keppel’s largest earnings contributor was its property division, which reported $262 million for 1HFY2019 versus $606 million in the previous year. In 1HFY2018, the property business benefited from a one-off divestment gain of $416 million.

On Aug 21, Keppel shares closed at $5.92, up 0.51% year to date. At this price, the company is valued at about $10.76 billion.

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