Should you trade Keppel shares?

• Keppel Corp Ltd (SGX: BN4) share price rallied to S$7.03 on Wednesday (17 August 2022)
• Its offshore and marine unit has just won a tender worth US$2.9 billion
• The stock is currently trading around a four-year high price
• Keen to trade Keppel shares? Open an account with us to start today.

Keppel O&M wins US$2.9 billion tender

Keppel shares have risen slightly since its offshore and marine (O&M) unit announced a new tender win worth an estimated US$2.9 billion.

Keppel O&M’s wholly owned subsidiary, Keppel Shipyard, has won an international tender from Brazil’s National Oil Company, Petroleo Brasileiro S.A (Petrobras), for the engineering, procurement and construction (EPC) of P-80, a Floating Production, Storage and Offloading vessel (FPSO).

Scheduled for completion in the first half of 2026, the P-80 is the second FPSO that Keppel O&M will be building for Petrobras for the Buzios field in Brazil. The first FPSO, P-78, is currently under construction by Keppel Shipyard.

The P-80 is structured on progressive milestone payments and will be cash-flow neutral during its execution lifecycle. It is expected to add over S$4 billion to Keppel O&M’s orderbook.

The P-80 will be one of the largest floating production units in the world with a production capacity of 225,000 barrels of oil per day, water injection capacity of 250,000 barrels per day, 12 million cubic metres of gas processing per day and a storage capacity of two million barrels of oil.

Keppel stock price: what’s the latest forecast?

The conglomerate’s stock has been in an uptrend in the last one month, increasing roughly 8% since mid-July 2022.

On a year-to-date basis, Keppel shares are up by 36%.

In terms of stock outlook, Keppel shares have an average price target of S$7.30 and rating of ‘outperform’, based on the latest SGX StockFacts consensus data.

The price target represents a 3.8% upside potential from Keppel’s last traded price of S$7.03.

The latest call came from UOB analyst Adrian Loh, who reiterated a ‘buy’ call and price target of S$10.11.

He wrote that Keppel’s latest net profit and dividend of S$0.15 per share were better-than-expected. The proposed dividend amount represents a payout ratio of 62%, which is higher than its historical payout ratio of 39-59% in the past 10 years.

However, UOB remains ‘cautiously optimistic that its China property business would turn around in the medium term’.

CIMB analyst Lim Siew Khee has also maintained an ‘add’ rating with a higher price target of S$9.37 (from S$7.20).

Her higher target price was given to ‘reflect’ Keppel’s ‘asset-light strategy’. She also raised her FY2022 full-year dividend sum to S$0.31 in view of the strategy.

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