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Contents
1.

Company Background...............................................................................................................2

2.

Recent Developments...............................................................................................................2

3.

Companys Strengths and Weaknesses....................................................................................4

4.

Financial Analysis and recommendations.................................................................................4

Bibliography..................................................................................................................................... 6
Financial Statements........................................................................................................................ 7
Appendix 1: Cash Flow Statement................................................................................................7
Appendix 2: Financial Ratios......................................................................................................10
Appendix 3: Balance Sheet.........................................................................................................11
Graphs: Financial Ratios................................................................................................................ 14
Graph 1: EPS............................................................................................................................. 14
Graph 2: P/E Ratio...................................................................................................................... 15
Graph 3: Dividend per share.......................................................................................................16
Graph 4: Book value................................................................................................................... 17

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1. Company Background
Keppel Corp is a Singapore based company which deals in marine property and
infrastructure businesses. The company was founded in 1968. Earlier company was
focussed on offshore and marine activities. In 1990 it acquired Asia Commercial Bank to
diversify its business and enter banking and financial services sector. Keppel Group of
Companies includes 4 fully owned subsidiaries and some partially owned subsidiaries and
shareholdings. According to its annual report, Keppel Group has presence in more than 30
countries with total assets of $31.6 billion.

2. Recent Developments
Currently its offshore and marine business is facing problems due to rise in oil prices
and financial downturn in China. The company is also facing the risk of oversupply as one
of its major business partner located in Brazil is facing difficulty in arranging funds for its
business. Under its Near Market, Near Customer Strategy, it is looking forward to finalise its
partnerships with Petroleos Mexicanos and Titan Petrochemicals Group which promise
growth in different geographies.
Keppel Group of companies listed the first data centre REIT of Asia on Singapore Stock
Exchange and were able to raise 513 million dollars through IPO. Currently, KEPPEL Data
Centre REIT has 1 billion dollars of assets under management through its 8 data centres
located in various strategically important areas located in Europe and Asia-Pacific. (M,
2015).
Seeing a surge in demand for high quality data centres across Europe, Keppel made
successful acquisition of Almere Data Centre 2 located in Netherlands previous year. It is
strategically placed near Alemere 1 data centre which is already an integral part of Keppel
Data Centre REIT. After this, Keppel added a 10,000 square feet warehouse in Australia, a
logistics hub in Singapore and another data centre in Vietnam (J, 2015).
In 2013, Keppel Infrastructure was formed and by the end of next year Keppel made plans
to combine CitySpring Infrastructure Trust with Keppel Infrastructure Trust and planned to

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inject 51% interest in Keppel Merlimau Cogen Pte Ltd to convert it into an enlarged entity
which also has a 1300 MW co-generation plant under its command (Corporation).
Singapore and China have adopted cooling measure which brought down the sales of
Keppel Land, which was able to sell only 2000 units in Asia, more than 50% reduction from
the previous years sales figure (Corporation). Keppel Land will continue to monitor the
markets closely to launch residential projects from its pipeline of about 70,000 homes
across Asia. It is also actively developing its portfolio of commercial properties overseas,
which comprises about 819,000 sm of gross floor area. Its joint venture with Array Holdings,
a retail management firm which is involved in managing one of the larger portfolios of
regional malls in Singapore and Malaysia, is part of our strategy to develop Keppel Land
into a multi-faceted property player.

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3. Companys Strengths and Weaknesses


Keppel Group has a global presence due to its customer base in more than 30
countries. It is a market leader in offshore rig design, construction and repair. The company
has a strong workforce of more than 30,000 individuals (Corporation). It has a favourable
mix of businesses with strong presence in infrastructure, investment, offshore and marine
industry.
The companys main weakness as analysed from their annual report is that a major portion
of their revenue comes from ASEAN countries. The economic slowdown in those countries
is affecting its businesses.
Future looks bright for the company as demand in floating submersible market is expected
to rise. Keppel group has also invested significantly in clean energy production which
promises good business in the future. The company has also finished many business deals
with several organisations which can boost its businesses in the near future. It should be
ready to deal with changing government rules and regulations as it moves forward to
become a major global player. It needs to be prepared to tackle with environmental issues
which are a by-product of its business environment.
Some of its major competitors are CITIC Pacific Ltd., Hutchison Whampoa Limited,
Kawasaki Heavy Industries, Ltd., Mitsubishi Heavy Industries, Ltd., Singapore Technologies
Engineering Ltd, Mitsui Engineering & Shipbuilding Co., Ltd.

4) Financial Analysis and recommendations


The company is growing very rapidly and has opened up many new business units as
mentioned under recent developments segment. There we can see that their cash from
investing activities has decreased from 877 million SGD to 126 million SGD (refer to cash
flow statement).
It is facing oversupply problem from some of its businesses including its offshore and
marine business which has affected its cash from operating activities. It has declined from
4.72 million SGD to -705 million SGD. Due to ongoing problems, companys financial ratios
like EPS, P/E Ratio, Dividend per share and Book value per share are showing a negative
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trend. EPS has decreased from 103 to 83.5 whereas P/E ratio has decreased from 0.09 to
0.08. Dividend per share has come down from 0.48 to 0.34 while Book value has come to
6.13 in 2015 from 7.22 in 2014 (refer to graphs).
The company has done very well in the past before global economic slowdown and is
expected to improve its performance as the efforts made now will start yielding results.
Several business deals with other companies conducted recently will open up new avenues
for Keppel Group. Its investment in clean energy will certainly bring a lot of opportunities.
We suggest not to invest currently in the stocks of Keppel Corp but if you are invested then
hold your stocks and wait for the market to revive.

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Bibliography
Corporation, G. C. (n.d.). Annual Report 2014: Keppel Corporation. Retrieved February 27, 2016,
from

Keppel

Corporation

Website:

http://www.kepcorp.com/annualreport2014/PDF/downloads/KCL_AR2014_Full_Report.pdf
J, F. (2015, November 1). Keppel Launches Greenfield Data Centre: marinelink. Retrieved
February 27, 2016, from Marinelink Website: http://www.marinelink.com/news/greenfieldlaunches400224.aspx
M, S. (2015, October 30). Keppel acquires data center project in Germany: DatacentreDynamics.
Retrieved

February

27,

2016,

from

DatacentreDynamics

Website:

http://www.datacenterdynamics.com/design-build/keppel-acquires-data-center-project-ingermany/95117.fullarticle

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Financial Statements
Appendix 1: Cash Flow Statement

Cash Flow Statement

2015
(value

in

2014
(value

millions

of

millions of

SGD)

in

SGD)

OPERATIONS
Net income

1,514

2,373

Depreciation/depletion

247

265

Non-Cash items

(405)

(526)

Cash taxes paid, supplemental

302

328

Cash interest paid, supplemental

149

131

Changes in working capital

(2,061)

(2,108)

Total cash from operations

(705)

4.72

(1,147)

(595)

1,273

1,472

126

877

Financing cash flow items

(3,313)

(263)

Total cash dividends paid

(872)

(763)

INVESTING
Capital expenditures
Other investing and cash flow items,
total
Total cash from investing
FINANCING

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Issuance (retirement) of stock, net

(40)

(14)

Issuance (retirement) of debt, net

924

272

Total cash from financing

(3,302)

(769)

NET CHANGE IN CASH


Foreign exchange effects

28

42

Net change in cash

(3,853)

155

5,712

5,558

1,859

5,712

247

265

149

131

302

328

Net

cash-begin

balance/reserved for future use


Net cash-end balance/reserved
for future use
SUPPLEMENTAL INCOME
Depreciation, supplemental
Cash

interest

paid,

supplemental
Cash taxes paid, supplemental

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Appendix 2: Financial Ratios

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Financial Ratios

2015

2014

EPS

83.5

103

P/E Ratio

0.08

0.09

Dividend per share

0.34

0.48

Book value per share

6.13

7.22

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Appendix 3: Balance Sheet

Balance Sheet
ASSETS

2015

2014

Cash And Short Term Investments

2,118

5,988

Total Receivables, Net

3,808

3,140

Total Inventory

10,651

10,681

Prepaid expenses

--

--

Other current assets, total

1,378

Total current assets

16,577

21,187

Property, plant & equipment, net

2,846

2,673

Goodwill, net

--

61

Intangibles, net

100

41

Long term investments

9,144

7,334

Note receivable - long term

--

258

Other long term assets

266

--

Total assets

28,932

31,555

Accounts payable

5,918

942

Accrued expenses

--

2,158

Notes payable/short-term debt

--

Current portion long-term debt/capital

1,657

1,796

LIABILITIES

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leases
Other current liabilities, total

2,331

5,929

Total current liabilities

9,906

10,825

Total long term debt

6,602

5,587

Total debt

8,259

7,383

Deferred income tax

356

266

Minority interest

830

4,347

Other liabilities, total

142

149

Total liabilities

17,836

21,174

Common stock

1,288

1,288

Additional paid-in capital

--

--

--

9,676

Treasury stock - common

(49)

(49)

Unrealized gain (loss)

--

103

Other equity, total

9,856

(637)

Total equity

11,096

10,381

28,932

31,555

1,811

1,812

6.76

5.93

SHAREHOLDERS EQUITY

Retained

earnings

(accumulated

deficit)

Total

liabilities

&

shareholders'

equity
Total common shares outstanding
Treasury shares - common primary
issue

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Graphs: Financial Ratios

Graph 1: EPS

EPS
120
100
80
EPS
60
40
20
0
2014

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2015

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Graph 2: P/E Ratio

P/E Ratio
0.09
0.09
0.09
0.09
P/E Ratio

0.08
Axis Title

0.08
0.08
0.08
0.08
0.07

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2014

2015

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Graph 3: Dividend per share

Dividend per share


0.6
0.5
0.4
Dividend per share
0.3
0.2
0.1
0
2014

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2015

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Graph 4: Book value

Book value
7.4
7.2
7
6.8
6.6

Book value

6.4
6.2
6
5.8
5.6
5.4
2014

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2015

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