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Keppel Corp focuses on property as it awaits O&M upturn; M1 acquisition to boost earnings

Goola Warden
Goola Warden10/22/2018 07:30 AM GMT+08  • 6 min read
Keppel Corp focuses on property as it awaits O&M upturn; M1 acquisition to boost earnings
SINGAPORE (Oct 22): Keppel Corp — once the world’s largest jack-up rig manufacturer — is taking a few steps to boost its earnings independently of the oil price rebound and a possible recovery in the global offshore and marine (O&M) sector. For the
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SINGAPORE (Oct 22): Keppel Corp — once the world’s largest jack-up rig manufacturer — is taking a few steps to boost its earnings independently of the oil price rebound and a possible recovery in the global offshore and marine (O&M) sector. For the past 2½ years, Keppel has had to lean on its property sector under Keppel Land to underpin earnings. Last year, it reorganised its fund management and fee income business under Keppel Capital, and this year, it is planning to simplify its telecommunications business with an offer to privatise Keppel Telecommunications and Transportation (KT&T), and to acquire a larger stake in M1. Under its fund management arm, Keppel is sponsor to and manages three real estate investment trusts (REITs) and a business trust, and a property fund called Alpha Investment Partners.

For 3QFY2018, Keppel announced a 15% y-o-y decline in net profit to $226 million on revenue of $1,295 million, down 20% y-o-y. However, the O&M division registered a net profit of $2 million for 3QFY2018, bucking three consecutive quarters of losses. Although net profit from the property division declined 6% y-o-y to $161 million during 3QFY2018, it continued to be the main driver of earnings, accounting for 71% of total net profit.

In the first nine months of the year, Keppel’s property division sold 3,180 homes worth around $1.4 billion. The company is expected to recognise, upon completion, profits from the sale of some 7,240 units of overseas homes worth about $2.4 billion, from 4QFY2018 through 2022.

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