10 Things to Know About Keppel Corporation Limited’s Latest Earnings
Yesterday, Keppel Corporation Limited (SGX: BN4) announced its earnings for the third-quarter ended 30 September 2017 (3Q2017). The financial period was from 1 July 2017 to 30 September 2017.
Here are 10 things investors should know from the earnings announcement:
1. Revenue rose 10.8% year-on-year to S$1.62 billion for the quarter. The firm has four business divisions – Offshore & Marine, Property, Infrastructure and Investments. All divisions, except Offshore & Marine, reported higher revenues. The Offshore & Marine division saw a 26% decline in revenue due to lower volume of work and deferment of some projects.
2. The third quarter marked the first year-on-year increase in quarterly revenues at the group level since 4Q2014.
3. Net profit grew 30% to S$291.8 million. Higher earnings from property trading, power and gas, and asset management businesses, as well as the sale of investments, more than offset lower contributions from the Offshore & Marine division and associated companies.
4. The Property division was the top contributor to the group’s earnings at 68%, followed by Investments at 18% and Infrastructure at 14%. The Offshore & Marine division did not bring in any profit for the quarter.
5. Diluted earnings per share (EPS) for the quarter was at 15.9 Singapore cents, up from 12.3 Singapore cents a year ago.
6. For the nine months ended 30 September 2017 (9M2017), revenue slipped 8.5% year-on-year to S$4.42 billion but net profit increased 11.2% to S$712.5 million. Diluted EPS came in at 38.9 Singapore cents, growing 10.8%. Net profit growth was mainly driven by an increased share of profit from associated companies, partially offset by lower operating profit and higher tax expense.
7. The conglomerate’s balance sheet improved for the quarter. As of 30 September 2017, it had a net debt of S$6.25 billion, a decline from S$6.97 billion seen at the end of 2016. As a result, net gearing decreased from 56% at the end of last year to 50% in the latest quarter.
8. Cash flow from operations for 3Q2017 was at S$700.8 million, a vast increase from S$459.6 million raked in a year ago.
9. For 9M2017, cash flow from operations surged more than six times to S$913.6 million. The significant improvement was due mainly to lower working capital requirements at the Offshore & Marine and Property divisions.
10. Keppel Corporation will be establishing a new business unit, Keppel Urban Solutions (KUS). The unit aims to be an end-to-end integrated master developer of large-scale mixed-use developments in the Asia-Pacific region. KUS’ capabilities will first be applied to Saigon Sports City, a 64-hectare township that Keppel Land is developing in Ho Chi Minh City, Vietnam.
Shares of the conglomerate are now selling at S$7.19. The price translates to a trailing price-to-earnings ratio of 15 and a dividend yield of 2.8%.