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:
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Global recession 2020
Discover everything you need to know about the possibility of a recession this year.
- Get expert analysis on how the risk of recession is impacting financial markets
- Access tools and guides to help you make the most of opportunity
- Find out what to trade, invest in and hedge during a recession
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.