Phillip Securities analyst Paul Chew maintained a Buy rating on Keppel Corporation Limited today and set a price target of S$10.70.
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Paul Chew has given his Buy rating due to a combination of factors that highlight Keppel Corporation Limited’s strategic decisions and financial positioning. Keppel’s decision to sell its 83.9% stake in M1’s consumer business to Simba Telecom for S$985 million is seen positively, as it allows the company to focus on its information and communication technology (ICT) business, which is crucial for the growth of its data center operations. This move is expected to alleviate the competitive pressures and capital expenditure burdens associated with the mobile sector, thereby enhancing overall group earnings.
Additionally, the transaction, despite resulting in an accounting loss of S$222 million, is anticipated to strengthen Keppel’s asset-light model, which is designed to optimize the value chain for data centers. The proceeds from the sale are planned to be used for reducing debt and returning capital to shareholders, which further reinforces the company’s financial health. Consequently, the target price for Keppel’s stock has been raised to S$10.70, reflecting confidence in the company’s strategic direction and financial prospects.
In another report released on August 1, DBS also reiterated a Buy rating on the stock with a S$9.00 price target.