Keppel Limited

The update on Sete projects, from the Keppel's end-year result announcement. Based on the info given, Keppel's Sete payment is progressive.

Four (4) out of Six (6) has started production. Two (2) of them in advance stages, and Two (2) is minimally done. Assume US$800 million each, thus the revenue recognized should be around US$1.6 billion. The milestone payments received was about US$1.3 billion. The outstanding is ONLY about US$0.3 billion or S$430 million.

A provision of S$230 million has been made, maybe further provision of S$200 million is sufficient. The situation isn't as bad as analyst estimated.

What is your view?

Let's see the update from SembM mid next month.

(not vested)

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7. Keppel, being one of the earliest Singapore companies to enter the Brazilian
market, has not been spared from this storm. We had taken steps to mitigate
our exposure by slowing the construction of Sete’s rigs after payments from
our customer ceased over a year ago.

8. On average, the construction of the first four semis has progressed by less
than 4% each quarter since the start of 2015. It is worth noting that of these
six projects, only the first two semis, which are also in the most advanced
stages, have been sent to our yard in Brazil. Meanwhile, minimal work had
been done on the last two semis.

9. Prior to the disruption of milestone payments, we had already received about
US$1.3 billion from Sete. As we await further clarity on the situation, we have
stopped construction of Sete’s projects by the end of 2015. We have also
made a provision of about S$230 million for these projects in 4Q 2015, after
assessing our construction progress, payment status and amounts due to our
vendors amongst other areas.

10.We understand that Sete’s board will soon be meeting to discuss future plans
for the company. It remains unclear when a final decision will be taken. Until
we hear from Sete officially and the situation and options available to us
become clearer, the above measures, in our opinion, are sound and
adequate.
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http://infopub.sgx.com/FileOpen/KCL%20FY...eID=386723

From its full year results, we can see there are many one off gains- Disposal of subsidiaries, fair value gains, gains associated with restructuring. It is unlikely these profits of 400 mil are recurring in nature. Furthermore with the o&m profit slow down only happening in the last 2 quarters, I expect Keppel's profit to be about 1 bil for next FY.

Not very sanguine for such low profits. In my opinion, long term shareholders have to be prepared for Keppel's corp profit to be low over the next 4 years, don't expect too much cash dividends as well (~25 cents per FY)

Does anyone know if Keppel is developing or have developed any technology or equipment that can be used in Shale oil extraction?

^^ dont know. But Keppel and Semb Marine are in offshore rigs, rather than land-based.

(22-01-2016, 03:40 PM)opmi Wrote: ^^ dont know. But Keppel and Semb Marine are in offshore rigs, rather than land-based.

IIRC, Keppel made land-based rig, but it was still the conventional oil rig, rather than for shale.

Keppel axes over 6,000 O&M workers as contracts dry up

It needs to rightsize to stay afloat.

Keppel Corporation’s shrinking staff numbers paint a disheartening picture of its battered offshore and marine segment. In its latest earnings presentation, Keppel reported that it has let go of about 6,000 direct staff in its local and overseas yards since January 2015, in a bid to slash costs and optimise its current operations.

Meanwhile, the size of its Singapore subcontract workforce has dropped by about 7,900 workers, representing a fourth of Keppel O&M’s subcontract employees.
Keppel suffered a wave of contract deferrals in the past year. It started the 2015 with the expected deliveries of 15 drilling jackup rigs, but eight of these have since been pushed into 2016.
“Bracing ourselves for a possibly long winter, we need to ensure that our overheads are well under control and that we are ready if the market conditions get tougher. We are preparing ourselves to meet the near term challenges by rightsizing our operations and resources,” said Keppel CEO Loh Chin Hua at the group’s earnings presentation.
Although Keppel is focussed on reducing costs, Loh stressed that it is still investing prudently in R&D as well as improving its productivity and core competencies.
“The storm hitting the offshore and marine business is not one which we are unfamiliar. Keppel had braved through many cycles, emerging stronger and more resilient each time,” Loh said.

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sounds pretty bad for OnG sector.


-not vested-

IMO, it is just the beginning for Kep Corp. We must not forget besides its O&M division, its property arm too is facing severe headwinds in China and Singapore. Sales of Chinese units have slowed and I wont be surprised property arm will undergo rationalistic too.

Only bright spark is Keppel DC REIT and M1, otherwise this conglomerate is in for a hard 4 years.

Based on the management comment on the company property segment, it is more promising as perceived by most. China tier-1/2 cities property markets are not as bad as most anticipated. Vietnam is also one bright spot for property development.

(not vested)

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5. Moreover, despite frequent media reports of an oversupplied property market,
our own experience has been positive. Home sales have picked up in several
cities in China since the second half of last year. Sales in China contributed to
72% of Keppel Land’s total residential sales volume in 2015, or 3,280 homes,
as compared to some 1,900 units in 2014.
...
37.Despite headwinds, 2015 was a stronger year for our Property Division as
Keppel Land sold about 4,570 homes, double the units taken up in 2014.
About 72% of these were sold in China and another 20% in Vietnam.

38.The two key markets of Keppel Land continue to be supported by healthy
demand-and-supply dynamics and strong growth. Property prices in China’s
first-tier cities continue to rise strongly with high absorption rate and falling
stock. High-growth cities including Tianjin, Wuxi and Chengdu are also seeing
balanced demand-supply with stable price and stock.
...
http://infopub.sgx.com/FileOpen/KCL%20FY...eID=386723

Keppel is preparing itself, on new opportunities arises from recent new MAS tightening regulation on asset managers? The "default" asset manager formed by sponsor, may not be necessary true anymore...

(not vested)

Keppel to consolidate and grow its asset management business

Keppel plans to consolidate its interests in business trust, REIT and fund management under
Keppel Capital and grow its asset management business.
...
http://infopub.sgx.com/FileOpen/MR%20-%2...eID=387061

(25-01-2016, 10:38 AM)CityFarmer Wrote: Keppel is preparing itself, on new opportunities arises from recent new MAS tightening regulation on asset managers? The "default" asset manager formed by sponsor, may not be necessary true anymore...

(not vested)

Keppel to consolidate and grow its asset management business

Keppel plans to consolidate its interests in business trust, REIT and fund management under
Keppel Capital and grow its asset management business.
...
http://infopub.sgx.com/FileOpen/MR%20-%2...eID=387061

What do you mean by that ? Thanks.