Keppel – non-core asset monetisation to drive yield
📝Macquarie Warrants Singapore last published a Macquarie Research (MQ) report on 24 September 2025 (https://warrants.com.sg/marketnews/highlight/todayhighlight/7731) which featured an upward revision of Keppel’s target price to $9.50.
📈Since the Macquarie Warrants post, Keppel’s share price has rallied 18.4% from $8.88 to $10.51 this morning (as of 905AM), while the Keppel call warrant we mentioned in the September article $KeppelMBeCW260330(MXDW.SI)$ (https://warrants.com.sg/tools/HistoricalPerformance/MXDW) has spiked 70.5% from $0.044 to $0.075
🚫There is no put warrant available over Keppel.
🆕This morning, we are sharing MQ’s latest upward price revision for Keppel and the reasons driving the upgraded target price
👀Read more for the full article containing an excerpt of MQ’s report and important disclaimers
Key points
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MQ thinks that KEP's stated S$14.4 billion for its non-core portfolio is realisable, and that it can be valued at around 1x Price /Net asset value (P/NAV)
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MQ expects the portfolio to be monetised over 2026-30. Proceeds should drive an additional 11c/sh in dividends, raising yield to 4.5%.
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MQ maintains Outperform. Raise target price to S$13.25 (previous: S$9.50) as they revise their Sum of The Parts (SOTP) framework
MQ is taking the view that Keppel (KEP) will be able to monetise its non-core portfolio for its stated S$14.4 billion by 2030, while in more conservative scenarios, MQ still thinks it is worth S$14.0 billion. MQ assumes the company pays out part of the divestment proceeds, driving a 2026 expected yield of 4.5%.
Central to MQ’s conservative valuation scenario of S$14.0 billion is that the Chinese landbank can be monetised for higher than the S$1.1 billion that KEP carries on its balance sheet. Over 2018-2024, KEP has divested its Chinese landbank at an average of 1.2x P/NAV. Thus, MQ thinks that its overall non-core portfolio for Real Estate could be valued at 1.0x P/NAV.
Offshore & Marine (O&M) remains a challenge, and monetisation could take a while. Compared with KEP's S$4.8 billion stated value for the segment, MQ is only able to derive a S$4.4 billion value (0.9x P/NAV) based on precedent transactions for its legacy rigs.
Assuming the assets are monetised, MQ believes the proceeds will be used to pare down associated debt.Assuming these assets are monetised evenly over 2026-2030 (i.e. S$1.9 billion per annum) and a 10% payout, MQ sees scope for an extra 11 cents/share special dividend. These translate into a decent 4.5% yield at current levels. MQ has incorporated this into their estimates.
Maintain Outperform. MQ’s thesis ultimately remains an asset monetisation story: divestments to continue supporting higher dividend payouts. MQ takes a cautious earnings outlook towards New Keppel, given frequent re-statements since 2020
Earnings changes: MQ reduces their FY2025-2026 earnings by 14% / 9% respectively; raise FY2027 by 4%.
Valuation: MQ revises their Sum-of-the-Parts stock methodology and raise their 12-month TP 39% to S$13.25 (previous: S$9.50)
Catalysts: a) Higher dividend payouts, b) faster than expected growth in funds under management
Note:Macquarie Research is independent from the Warrants business, what the Macquarie Warrants desks quote from Macquarie Research may not reflect the complete analysis of Macquarie Research on the relevant company over time.
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Macquarie listed a new Keppel call warrant $KeppelMBeCW260630(LEDW.SI)$ (https://warrants.com.sg/tools/livematrix/LEDW) after the previously highlighted call warrants MXDW rose in delta alongside Keppel shares. LEDW is now the trending Keppel call warrants with the tightest spread and highest liquidity.
Costing $0.049, the warrant will move in the same direction as Keppel shares but at approximately 6.3 times more, based on its effective gearing level of 6.3x as of 920AM today. Click on the warrant live matrix to see how it moves alongside Keppel shares: https://warrants.com.sg/tools/livematrix/LEDW
The warrant can be traded on an investor’s brokerage account just like shares, and does not come with margin calls. Those bullish on Keppel shares in the short-term may therefore wish to consider using call warrant LEDW instead. There is no put warrant available over Keppel.
Before trading warrants, investors should familiarise themselves with the features and risks associated with trading warrants.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
