Keppel Limited

(29-01-2016, 09:54 AM)thor666 Wrote: Unfortunately as for true independence of board decision, I believe there is a high level of influence by a majority shareholder.

That would be true for all companies isn't it?

Yes true. Provided the company is not a private limited or a company which a shareholder owns more than 51%

(29-01-2016, 10:44 AM)egghead Wrote:

(29-01-2016, 09:54 AM)thor666 Wrote: Unfortunately as for true independence of board decision, I believe there is a high level of influence by a majority shareholder.

That would be true for all companies isn't it?

It is the way activist investors used, isn't it? Most of them, are top few shareholders, but only having a small stake in the companies targeted.

BaronWaffet, I think that one should be looking at whether the divestment of M1 to invest in other things can bring about better returns to the shareholders rather than whether it is currently at a "low" price or not. At current PE of around 12, assuming no earnings growth, the earnings yield is only about 8%. Which is quite low compared to Keppel's ROE.

Unfortunately, their replies do not reveal much (understandably so)
You can tell the replies are generic.

Also, the gist of your complaint/message is regarding the (alleged) divestment of the M1 stake
They have to be careful not to release unwittingly any additional market sensitive information.

Your efforts are really commendable, but unfortunately, not much results can be attained via this route

(29-01-2016, 01:25 PM)owq Wrote: BaronWaffet, I think that one should be looking at whether the divestment of M1 to invest in other things can bring about better returns to the shareholders rather than whether it is currently at a "low" price or not. At current PE of around 12, assuming no earnings growth, the earnings yield is only about 8%. Which is quite low compared to Keppel's ROE.

OWQ personally I would never fire a manager who has done well. 8% yield is a decent rate of return.

M1 has decades of consumer growth factored into their customer share of the market. Singapore's population will only get bigger together with the global population. 

I can easily point out to you companies giving even dividend payouts of 13%. Personally I would never trade stable long term returns for get rich quick schemes.

As my mentor the great value investor once said, "Buying a great company at a good price sure beats buying a good company at a great price."

(29-01-2016, 01:25 PM)owq Wrote: BaronWaffet, I think that one should be looking at whether the divestment of M1 to invest in other things can bring about better returns to the shareholders rather than whether it is currently at a "low" price or not. At current PE of around 12, assuming no earnings growth, the earnings yield is only about 8%. Which is quite low compared to Keppel's ROE.

Comparing apple to apple.

ROE wise, Keppel (14%) is much worst than M1 (43%). Historical earning yield wise, Keppel (PE 6) is better than M1 (12), but forward earning yield is telling different story. Furthermore, we should consider cash earning yield. Quality of earning for M1 is 1.3, while Keppel is negative.

(not vested)

On a separate note, it will be interesting to note the beneficiaries of those whom are going to pick up some of the non-core assets from 'distressed sellers'. In survival mode, a seller turns distressed and buyers whom had been prudent or have the cash (and connections), will benefit. There is asymmetry.

A little bit of history - Keppel divested SETSCO to VICOM in 2003, during the times when oil was languishing in the 20-30usd/barrel times. A few years ago, it had just privatized Keppel FELS. Fast forward the next 5-7years and most should know what impact SETSCO had on VICOM.

Keppel's divestment: http://www.kepcorp.com/en/news_item.aspx?sid=560
This morning, fellow brethren-sufferer of oil price SCI has just divested something to Eastman: http://infopub.sgx.com/FileOpen/DIVESTME...eID=387758

(29-01-2016, 03:31 PM)BaronWaffet Wrote: OWQ personally I would never fire a manager who has done well. 8% yield is a decent rate of return.

M1 has decades of consumer growth factored into their customer share of the market. Singapore's population will only get bigger together with the global population. 

I can easily point out to you companies giving even dividend payouts of 13%. Personally I would never trade stable long term returns for get rich quick schemes.

As my mentor the great value investor once said, "Buying a great company at a good price sure beats buying a good company at a great price."

Sure, let's suppose 8% is a decent rate of return. But as a holding in Keppel, is it good enough? Considering the cost of capital, (from their 2014 report, WACC was 6.45%), the net return may not be that great. I could just buy M1 myself. I don't need Keppel to hold it unless it has some sort of synergy with their core businesses. Is Keppel a Berkshire Hathaway...? But personally I don't see their diversification strategy in a good light.

(29-01-2016, 03:32 PM)CityFarmer Wrote: Comparing apple to apple.

ROE wise, Keppel (14%) is much worst than M1 (43%). Historical earning yield wise, Keppel (PE 6) is better than M1 (12), but forward earning yield is telling different story. Furthermore, we should consider cash earning yield. Quality of earning for M1 is 1.3, while Keppel is negative.

(not vested)

That is from outside investor point of view. From Keppel point of view, holding M1 only gives them 8% earnings yield (being conservative here and assuming no growth). Also have to consider their cost of capital. It is a drag on their ROE, if they can find better investments.

Hope I didn't make any wrong assumptions. Still learning about valuation. Please correct me if I'm wrong.

TH is just telling everyone that M1 will eventually lose market shares to the 4th telco, more than ST/SH... so in their best interest, KC should sell it off now.

It's a biz decision, so to be fair, TH and KC has to best protect it's interests!

I would say, sell M1 now, rather than wait for the dilution of market shares, which is a given already..

imho of cos!

Free up the capital and buyout cheap Sembmarine directly, go for 1 MEGA OFFSHORE YARD for #1 position in the world!
Grow from Position of Strength, this downturn is the right time to do it!