Since our last report, “O&M clarity likely by earlier 2021” on 30 October 2020, the share price of Keppel Corporation (KEP) staged a nice recovery, rising 30% till our rating turned HOLD on 8 January 2021 when the stock closed at SGD5.63. At current levels, we see most of the positives priced in.

The group reported a SGD506m net loss in FY20, impacted by SGD952m of impairments in the offshore & marine segment. Other key business units remained profitable.

As expected, the group will exit its offshore rig building business, and a restructuring of Keppel O&M will occur. However, the duration for the restructuring will take two to three years.

Meanwhile, the group will continue with the divestment of non-core assets and plough resources into new growth areas.  HOLD.

Source: OCBC Research - 29 Jan 2021