Throwing Diversification Out of the Window - Why I'm Going All In Into Keppel Corp!

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 Apologies if this post seems rushed, but that is mainly due to the fact that this is probably one of the most exciting ongoing stock developments right now in SGX! It is no secret that there has been a spectacular implosion of Keppel Corp's (SGX: BN4) share price from $7.34 to $5.49 in a singular day due to becoming Ex Entitlement! At Sembcorp Marine's current share price of 0.126, it has resulted in new shareholders not being entitled to $2.41 worth of Sembcorp Marine shares per Keppel Corp share. 

Indeed, the price drop does seem scary when I woke up to a loss of almost $600 SGD. In response, I have sold all my other holdings and have gone all in on Keppel Corp! I will be illustrating why I have done so in this brief article today. 

Firstly, with the divestment of the O&M division, there is no denying that there will be a material negative impact on earnings moving forward. 

We can see that after the divestment of Keppel O&M, Pro Forma Diluted EPS will be around 46.7 cents per share. With China lifting COVID restrictions, there are many tailwinds for Keppel's other divisions such as Urban Development, resulting in higher future EPS. In recent times, Keppel has traded at a PE ratio of approximately 15. Even if we discount the fair value PE ratio to 14, that would result in a fair value of $6.53. At a dividend of $0.33 per year, Keppel is trading at a 6% dividend yield. Does that make sense for a blue-chip company like Keppel?

Additionally, after divesting Keppel Offshore & Marine, Pro Forma Net Tangible Assets (NTA) will be $5.23. Keppel has always traded at around an x1 PB ratio, but with its transition to an Asset Light business model, we could see it trade at a premium in terms of book value in the near future. Keep in mind that NTA does not equal Net Asset Value and that NAV is higher than NTA. However, I believe that the NTA of $5.23 will serve as a price floor in the short and long term. Hence, my target price for Keppel Corp will be approximately $6.70 in the short term, and if that does happen, I will not hesitate to slash my holdings by half so as to reinvest in my previous holdings.

Overall, I believe that Keppel is currently heavily mis-priced. The corollary of this is that I will be going all in! 

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Disclaimer: Please take everything published within this blog with a pinch of salt. Nothing I say here should be misconstrued as any form of financial advice whatsoever. In fact, I am probably the absolute last person you should approach for any sort of advice. All self-computed figures are calculated to the best of my ability, but I cannot guarantee they are 100% accurate.


Thank you for reading my blog, and I hope you have learnt something, no matter how seemingly minuscule. I would greatly appreciate it if you subscribe as such posts take a decent chunk of time to dish out, ciao!



Welcome to my blog! To give some background information about myself, I'm an 19 year old Singaporean "investor" that is certainly no stranger to financial mistakes or recklessness. With this blog, I hope to share my thoughts and findings, as well as be able to educate anyone who is willing to give this blog the time of day! The term "passive loss" is obviously one of sarcasm. It's a joke-term created when my JC friends and I would often remark on how much did my portfolio lose after a lesson, or a day of school. Nevertheless, I am a dividend investor with a healthy (or rather, unhealthy) risk appetite!

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