Keppel will realise a gain of S$660mm, thus increasing its NTA/share from S$2.84 to S$3.26.
PetroChina is required and intends to make a mandatory general cash offer for the remaining shares in SPC.
Assuming transaction is completed by end-09, our FY09 net profit would rise by 72% from S$920m to S$1.58m factoring in the S$660m gain. FY10 and FY11 net profit forecasts (indicative of operating earnings) would be reduced by 18% and 21% respectively to S$707m and S$590.7m. Revised EPS for FY09, FY10 and FY11 at 99.2 cts, 44.4 cts and 37.1 cts respectively with PEs at 7.0x, 15.7x and 18.8x.
Our revised sum-of-the-parts for Keppel is S$5.90/share, factoring in the S$1.47b selling price for its SPC stake. And also factored in a higher ex-rights target price of S$2.35 for Keppel Land (S$1.70 previously). Our previous SOTP was S$4.85/share.
Special dividend from the divestment proceeds is likely. Maintain SELL on Keppel as share price is significantly above our revised target price of S$5.90. With the divestment of SPC, Keppel will become a less compelling oil play.
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