Keppel Corp - New green trust listing. Solid dividend.

Keppel Corp's profit up 15% on-year, plans to list "green" trust (Source Channel news asia)

	Photos 1 of 1

Conglomerate Keppel Corp on Tuesday posted record profits for 2009, but warned that surpassing the performance will be a challenge this year.

Keppel is also planning to list a business trust in the second quarter, focusing on eco-friendly infrastructure.

The oil rig business was good for Keppel Corp in 2009 as improved margins from rig orders boosted its offshore and marine division, which contributes about two-thirds of the group's profits. Strong earnings from its property unit also helped.

Keppel's net profit for 2009 jumped 15 per cent on-year to a new record of S$1.26 billion. But revenue rose a modest four per cent to S$12.2 billion.

In the quarter ended December, Keppel earned S$343 million on revenues of S$3.03 billion. The fourth-quarter numbers exclude an exceptional gain of S$322 million from selling its stake in Singapore Petroleum Corp.

"This is the best year ever," said Choo Chiau Beng, chief executive officer at Keppel Corp. "While we are working very hard to make sure that we (grow the) ... business and so on, I think it will be tough to beat this result."

To spur growth ahead, Keppel plans to list a business trust in Singapore, which will focus on green infrastructure.

Choo said: "We think there's a lot of need for new green projects, and we will actively participate in that and we see that the trust will give us an avenue to do that in a more efficient way.

"We are optimistic about the environmental business. Because sustainable environment is something that human beings and governments have to invest and have to spend money on, so we are on this trend."

Keppel Corp said that for now, the aim of the green trust is not to raise money, but to reward its investors.

It will distribute 50.5 per cent of K-Green Trust to shareholders by giving them one unit for every five shares held. Keppel Integrated Engineering will keep the rest. This means a distribution value of 23 cents per share.

This will be part of a proposed dividend of 61 cent, which the company is proposing to offer shareholders. There will be a final cash dividend of 23 cents per share, on top of the interim cash dividend of 15 cents per share, paid earlier this year.

The green trust's initial assets will comprise two Singapore waste-to-energy incineration plants and a distilled water complex.

My Take:

Keppel Corp was being pushed down with the rest of the crowd yest to hit a 20 days low of 8.08. This morning it gap up to open at 8.20 on the back of the solid 2009 result and news of its listing of a green trust.

The final dividend in my view is very attractive: 23 cents cash and another 20 cents in form of share = 43 cents, this is taking out the interim cash dividend of 15cents which has been paid.

Technically, yesterday Kepcorp is oversold, and today it may attempt to fill the gap between 8.28 and 8.35 that was caused by the drop on Friday. 8.31 seems to be the immediate resistance, with immediate support at yest low of 8.08.

This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework as usual.