This week’s edition of stock highlights focuses on the latest business updates from three blue-chip businesses.
Keppel Corporation Limited (SGX: BN4)
Offshore and marine (O&M) conglomerate Keppel Corporation reported a turnaround in fortunes for the first nine months of 2021 (9M2021).
The group chalked up a net profit for the period, reversing last year’s net loss.
Keppel saw broad-based revenue growth across all its divisions, with group revenue up 14% year on year from S$4.8 billion to S$5.5 billion.
The firm’s O&M net order book rose sharply from S$3.3 billion at the end of 2020 to S$5.5 billion as of the third quarter of 2021 (3Q2021).
Five major projects were delivered on time and without incident, resulting in clients awarding the division with project incentives.
Keppel’s energy and environment division continues to pursue opportunities in renewables, low-carbon, and decarbonisation solutions.
The division recently began offering energy-as-a-service to help defray its client’s energy costs in a partnership with real estate firm Perennial Holdings.
The group’s urban development division has also done well, selling 3,460 units worth S$3.3 billion in 9M2021 compared to 2,030 units worth S$1.5 billion in the same period last year.
The division also holds a sizable land bank, of which 63% is in key cities of China and Vietnam that have seen home price appreciation.
On the data centre front, the group has completed its investment in two data centres in China and one in the Netherlands.
It also announced the acquisition of a third data centre in China in 9M2021.
Asset management fees for Keppel Capital have grown to S$167 million in 9M2021 compared to just S$108 million two years ago.
All in, it looks like Keppel is proceeding well on its Vision 2030 and looks on track to achieving its stated objectives.
CapitaLand Investment Ltd (SGX: 9CI)
CapitaLand Investment, or CLI, has released its very first business update since its listing more than a month ago.
The real estate investment manager splits its fee income-related business (FRB) into two divisions — Fund Management (FM), and Lodging Management.
The FM division reported a 9% year on year growth in funds under management (FUM) to S$84.3 billion for 9M2021.
Fee-related earnings (FRE) performed admirably too, logging a 34% year on year surge to S$292 million.
FRE as a percentage of FUM also saw an improvement to 0.46 percentage points, up from 0.40 percentage points a year ago.
Lodging management division also reported improved operating and financial numbers.
Revenue per available unit jumped by 33% year on year while occupancy rate increased by around 10 percentage points to about 60%.
CLI’s capital recycling initiatives has lowered its net debt to equity ratio to 0.49 times, while the interest coverage ratio remained healthy at 7.8 times.
Net asset value per share stood at S$3.07 as of 30 September 2021.
To date, CLI has chalked up a total divestment value of S$12.3 billion while diverting S$5.3 billion into new investments, of which S$1 billion was deployed into new economy assets.
Meanwhile, in a separate announcement, the group also established two private funds in Japan and South Korea.
This move sees CLI divesting two office assets to the Japan private fund and establishing its third private fund in South Korea.
Together, the setting up of these two funds has bumped up FUM by S$688 million.
Singapore Post Limited (SGX: S08)
Singapore Post reported a mixed set of earnings for its fiscal 2022 first half (1H2022) ended 30 September 2021.
Revenue for its Post and Parcel division fell by 17.5% year on year to S$325.5 million.
Letters and printed papers continued their steady decline with volume falling 10% year on year to 202 million for 1H2022.
However, this decline was offset by a 29% year on year jump in domestic eCommerce volume to 23.1 million.
This sub-division accounted for 40% of the Post and Parcel division’s revenue, up from 32% last year.
International Post and Parcel also saw a 27% year on year fall in volume from a high base last year where in early 2020, there was a surge in shipments from China before the closing of its borders.
Coupled with the absence of government grants this year, the Post and Parcel division saw its operating profit plunge by 52.6% year on year to S$11.3 million.
The Logistics division, however, was the bright spark for Singapore Post.
Revenue increased by nearly 30% year on year to S$379.5 million, led by higher sea freight volumes and rates.
The growth in eCommerce deliveries also contributed to the division’s robust performance.
Operating profit nearly tripled year on year to S$16.2 million.
Overall, at the group level, operating profit increased by 28.4% year on year while underlying net profit (excluding one-off and exceptional items) rose by 18.8% year on year to S$37.4 million.
An interim dividend of S$0.005 was declared, unchanged from the amount declared in the previous year.
Group CEO Vincent Phang intends to press on with Singapore Post’s transformation to position the group as a global eCommerce player.
To that end, the group will increase its shareholding in Freight Management Holdings Pty Ltd, a leading fourth-party logistics provider in Australia, from 28% to 51%.
He is also on the lookout for opportunities to divest non-core assets and redeploy the capital to areas with better growth prospects.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
