Keppel share price: Where next after falling to 3-month low?

Analysts say Keppel is likely to see big upsides over the next 12 months, despite Q2 2020 earnings being ‘significantly and adversely impacted’.

Keppel share price: What’s the latest?

Singapore marine and property conglomerate Keppel Corporation (SGX: BN4) saw its share price drop over 4% on Friday (24 July 2020) morning, after it provided a weak guidance for its upcoming second quarter financial results.

The group’s stocks continue to trend lower as at press time. As at 13:45 SGT, Keppel shares are trading at S$5.70 per share – a three month low.

IG’s market analysis show that ‘buys’ currently form 75% of all trades on the Keppel counter.

Despite the stock facing downward pressure, 91% of IG client accounts with open positions in this market anticipate that Keppel’s share price will rise, with the remaining 9% holding short positions.

Are you looking to trade Keppel shares? Start today by opening a live or demo IG account.

Why did Keppel’s share price drop 4.4% on Friday?

The group, whose core businesses are in offshore and marine, and infrastructure and property development, stated in a Singapore Exchange filing posted on Friday that its earnings for the second quarter of 2020 ‘will be significantly and adversely impacted’ due to Covid-19.

‘The Covid-19 pandemic has severely impacted the global economy and brought about significant market volatility and uncertainty, including a sharp reduction in global demand for oil and in oil prices,’ the group said in the note.

‘Amidst the highly volatile environment and low oil prices, oil majors are curtailing exploration and production spending, which has adversely impacted day-rates and utilisation rates of the O&M (offshore and marine) industry generally and the group’s O&M business more specifically.’

As such, Keppel revealed that it will recognise material impairments pertaining mainly to the O&M business in its Q2 fiscal 2020 results.

Keppel is in the process of finalising the unaudited consolidated financial results for Q2 and the first half of 2020, to be released on Thursday 30 July 2020.

Keppel share price: Where next according to top analysts?

Keppel currently has an average stock rating of ‘buy’ from 12 brokers polled by Refinitiv.

Earlier this month, UOB analyst Adrian Loh called a ‘buy’ on the stock alongside a 12-month share price target of S$7.15. This represents an upside of 25.2% from the last traded price.

Loh cited two main factors for his recommendation. Firstly, he stated that Keppel could potential achieve a long-term return on equity of 15% and a ‘high-single-digit’ return on invested capital as indicated in the company’s Vision 2030.

Next, he believes that Temasek’s offer to purchase a majority stake in Keppel remains intact, with the sovereign wealth fund’s position on long-term investments.

Still, the stock is not without its downsides, Loh added. He said that risks ahead include a lower-than-predicted dividend payout, as well as negative developments regarding the group’s Swedish subsidiary Floatel’s ongoing impairment review.

Meanwhile, RHB analyst Leng Seng Choon named Keppel his ‘top pick’ for the O&M sector, while maintaining a ‘buy’ rating and a share price target of S$7.30.

He said that the company is likely to still see ‘respectable contributions’ from its non-O&M sectors, such as property which he believes could still drive profitability.

How to trade Keppel Corp shares with IG

Are you feeling bullish or bearish on Keppel Corp's share price? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Keppel Corp Ltd> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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