Keppel share price: S$250 million worth of 5-year notes priced at 2.25% p.a.

A series of investor announcements were made this week, starting with the price reveal of a new batch of securities.

Several announcements came out of Singapore offshore, marine and property group Keppel Corporation's investor relations office this week.

Keppel prices five-year notes at 2.25% fixed interest rate

On Monday 13 April 2020, the company announced the price of S$250 million worth of five-year notes at a fixed interest rate of 2.25% per annum.

Keppel plans to issue the securities – payable semi-annually in arrear – ‘on or around’ 20 April 2020. The notes are expected to be listed on the Singapore Exchange (SGX) on or about the following business day after they have been issued.

According to the press release, net proceeds from the issued notes will be used by the company for general corporate or working capital purposes, including refinancing of existing loans.

Following this announcement, Keppel’s shares closed the day 1.23% lower at S$5.62 per share.

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Floatel updates; new S$10 million marine energy partnership

The next day – on 14 April 2020, the group provided an update on the financial status of its debt-ridden subsidiary Floatel, in which it has a S$477 million stake.

Keppel revealed that the Swedish oil production platform vessel operator’s negotiations with creditors and lenders to finance its debts were still in a ‘standstill’.

Finally, on Wednesday 15 April 2020, Keppel Offshore & Marine and the Energy Market Authority entered into a S$10 million partnership to develop innovative energy marine solutions in the areas of distributed energy resources, digitalisation and emerging low carbon alternatives.

Following these two announcements, Keppel’s stocks had dipped 1.68% to S$5.57 per share to finish Wednesday’s session, based on IG trading data.

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UOB lowers 12-month share price target for Keppel Corp

In a note posted on 08 April, UOB analyst Adrian Loh had given a ‘buy’ rating on Keppel Corp stocks alongside a lower 12-month price target of S$7.20 per share (from S$7.75 previously).

He wrote that there is room for further upside for the company’s share price as stocks are currently trading at 22% below then-offer levels, which he views as an excessive discount.

He further noted that the company has been executing its strategic plans well prior to Temasek’s partial offer to acquire an additional 31% of Keppel shares at S$7.35 each, which is still in the process of receiving global regulatory approvals.

To this end, he pointed out that Keppel has been ‘investing heavily into new areas (telecommunications and asset management), while its offshore & marine unit has made good headway in targeting new clients in the offshore renewable space’.

Loh also foresees a ‘decent’ growth outlook for the company this year, citing Keppel’s 2019 financial results, which showed that with the exception of a slight decline in its property segment, all other business units saw year-on-year operating profit growth.

‘In our view, the company’s growth outlook is likely to be robust this year with demand continuing at healthy levels for its China properties, its offshore marine segment looking to increase headcount due to higher business activity, and the Keppel Marina East Desalination Plant coming close to completion and scheduled to commence operations in 1H20,’ he wrote.

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