[SINGAPORE] Phillip Securities and CGS International (CGSI) have raised their target prices for Keppel, following the asset manager’s announcement of a 27.2 per cent increase in second-half net profit last Thursday (Feb 5).
Keppel shares rose as high as 4.1 per cent to S$12.12 as at 10.42 am on Monday, with more than 3.1 million shares trading hands. This marked the stock’s highest price in over 12 years, extending its rally from last week when it advanced 6.5 per cent.
The counter ended at S$12.10, 4 per cent or S$0.46 higher.
Phillip Securities on Monday raised its target price for Keppel by 13.1 per cent to S$13.80 and reiterated its “buy” call, amid expectations of tailwinds supporting the asset manager’s earnings growth.
Meanwhile, CGSI on Friday lifted its target price for Keppel by 6.4 per cent to S$13.52 and kept its “add” call, noting that the group’s H2 net profit exceeded expectations and that the potential special dividend could be a long-term share price catalyst.
“New Keppel earnings growth will be supported by asset management fees, lower interest rates, cost cuts, the Keppel Sakra Cogen power plant, and maintenance income from subsea cables and decarbonisation and sustainability solutions,” said Paul Chew, head of research at Phillip Securities.
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Noting that Phillip Securities’ target price for Keppel is based on a sum-of-the-parts approach, Chew added that Keppel’s adjusted revenue and profit after tax and minority interests were within expectations at 97 per cent and 96 per cent respectively.
Likewise, Citi Research on Sunday maintained its “buy” call on Keppel and assigned it a target of S$13.17, noting that the company remains “seemingly confident” about its plan to monetise non-core assets and hit its funds under management target.
“Keppel believes that expanding FY2025’s assets under management of S$95 billion by S$5 billion more is easy as many investors are exiting US to go to Asia, which will benefit Keppel,” said Citi Research analyst Brandon Lee.
Earnings growth outlook
Phillip Securities’ Chew expects New Keppel’s underlying earnings to grow 15 per cent year on year to S$909 million, as the group’s infrastructure segment is poised to benefit from earnings drivers.
Chew and CGSI analyst Lim Siew Khee noted that the commencement of the Keppel Sakra Cogen plant – which is set to be operational in H1 2026 and is fully contracted for 2026 and 2027 – could contribute to earnings for the infrastructure segment.
The completion of the Hong Kong and Tuas Nexus Integrated Waste Management Facility plants in 2026 is also expected to contribute to earnings for the decarbonisation and sustainability solutions segment, Chew said.
Execution of the decarbonisation and sustainability solutions’ S$7.1 billion contract backlog is also expected to drive earnings for 2026 and 2027, said Lim.
On the real estate front, Chew noted that asset management fees and lower interest rates are expected to be key growth pillars. He added that Keppel South Central is a non-core asset earmarked for monetisation when occupancy, which currently stands at 50 per cent, stabilises.
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