Broker: Goldman Sachs (GS)
Date of Report: 28 July

Excerpt from Goldman Sachs report.

Report Summary

Stock Focus: Keppel Ltd.
Action: Buy (Reiterate)
Target Price: S\$13.09
Keppel Ltd. has announced the proposed divestment of six operational rigs to the Keppel Offshore Fund (KOF) with a commitment of US$1.5 billion from funds managed by Apollo. This move will add S$1.2 billion to announced monetisation in 2026, generate cash proceeds of S$611 million (based on a 50% divested stake), but result in an accounting loss of S$92 million. Another four rigs are set to be completed and divested over 2027-28, potentially generating S$1.3 billion in cash.
Strategically, the divestment aligns with Keppel’s efforts to streamline its business and reduce non-core assets. The improvement in net gearing and growth in funds under management are seen as outweighing the divestment loss. The report emphasizes a focus on infrastructure earnings resilience, fee earnings growth, and real estate monetisation going forward. Downside risks include slower than expected asset monetisation, weaker integrated power margins, and interest rate risk.

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