Keppel Telecommunications & Transportation

[cyclone]

Financial result for the year ended 31 December 2014 is available now : http://infopub.sgx.com/Apps?A=COW_CorpAn...uddies.com

It declares a 3.5 cents final dividend and a 11.5 special dividend. Total 15 cents cash dividend.

[johnnydash]

The special dividend is definitely a pleasant surprise but the stock is quite significantly undervalued. in fact by buying cum dividend at current price, it is still a very good entry point. In fact I bought another big batch today.

The market sold down on keptt( more than 20%) without regard to the fundamentals of the company in the past month. I took the chance to gather quite a sizable position(proportionally) somewhat uncharacteristically. I thought it was quite a rare opportunity to buy into a good company at a good price ( one better than buffet advice to buy good company at a fair price)

Fundamentally, cum dividend, keptt is trading at about 10-11 PE, which is cheap for a company with ROE in the early to mid teens, and assuming a conservative growth rate of 10%. it has good cash flow especially with the DC reit acting as a conduit for capital recycling. I have always been adverse to buying into growth stories but keptt has more than proven itself over the past 4-5 years. Just take a look at its annual report in 2010 and compare it to the current status of the company. The transformation is breathtaking. Its logistics segment was miniscule and data centre segment was non existent. Now it has 6-7 logsistics facilites and 3 data centres on its own balance sheet and 30% stake in a stable of data centres through DC reit. Looking forward I can count 6-7 soon to be or newly completed facilities that will contribute to growth. Not to mention its capacity to invest in more projects with the cash horde cum debt headroom. And built in rental reversions. And management fee of 6-8 million per annum. 10% growth rate is really a rock bottom assumption. business wise logistics and data centres have very favourable characteristics ensuring that projects IRR (and hence a good company-wide ROE) can be achieved. but that is going to be a lengthy discussion for another day.

Keppel group has shown themselves to be a stellar group of company but even significantly, they have a great track record in understanding that the aim of the management is to allocate capital effectively. Just look at the things management say. And more importantly, their actions. Something that struck me was how Keppel REIT, listed in 2006, has grown its AUM from 680 million to $7 billion currently. Finally, it also makes perfect sense for Keptt to spin off its logistics business into another reit to catalyse captial recycling.

[old friend]

eps of 44.4cts. Divds 15cts. At historical PE ratio of 4x, it is worth at least $1.77.

Personal opinion only.

[kayhian]

just buy and hold this gem

[propertyinvestor]

Congrats to those who took advantage of the recent price weakness to add on to their holdings!

[old friend]

eps of 44.4cts. Divds 15cts. At historical PE ratio of 4x, it is worth at least $1.77.

Personal opinion only.

$1.77 tgt hit today. Next tgt $1.84. But uptrend may reverse if $1.68 (turn support) cannot hold. Recent low only $1.40.

Personal opinion only.

[johnnydash]

heard from market participants that based on the price and volume action and bid ask queue,fund/s are accumulating. what with the high dividend the price will see strong upward bias. i dont know much about that.


what i know better is that the stock is still undervalued when we take out the dividend distribution, its trading at only 1.65. (actually even if we leave it on stock is still undervalued) it has an attractive roe and good growth prospect. i look forward to the growth story in coming quarters; completion of existing logsitics facilities or further acquistions and good probability of the listing of logistics arm.

vested and will add if not capital constrained.

eps of 44.4cts. Divds 15cts. At historical PE ratio of 4x, it is worth at least $1.77.

Personal opinion only.

$1.77 tgt hit today. Next tgt $1.84. But uptrend may reverse if $1.68 (turn support) cannot hold. Recent low only $1.40.

Personal opinion only.

[Contrarian]

Mid Jan it was so cheap, no body want. Now everyone scrambling to buy!!!

[johnnydash]

Mid Jan it was so cheap, no body want. Now everyone scrambling to buy!!!

Some part of it is psychology, selling begets more selling. Fear took on a life of its own. Some is investment philosophy; never to catch a falling knife. Practitioners of ta will cut loss/sell on a downtrend. In addition, institutional investors have certain restrictions, when buying or recommending. Perhaps most relevant to keptt is the market capitalisation restriction. It is not uncommon for institutions to have market cap requirement of above 750 million or above 1 billion.

There are some changes in terms of fundamental as well. The large cash distribution possibly sends a strong and positive signal of management's philosophy in how they deal with capital, cash and dividends. We may reasonably expect higher dividends(than normal dividends) to come whenever the recycle their capital by selling their centres to their reit + possible listing of logistics arm(perhaps another special dividend).

[old friend]

$1.84 tgt also hit today!