SINGAPORE (Aug 18): DBS Group continues to like Keppel as a proxy to ride on property and offshore & marine recovery after announcing two divestments this week.
The group is selling its entire 100% stake in Keppel Lakefront (Nantong) Property Development to a subsidiary of China Vanke, for a consideration of RMB1.43 billion ($292 million).
See: Keppel Land China fully divests Waterfront Residences in Nantong for $75 mil gain
Spanning a total land area of 167,051 sqm, Phase 1 of the project, which comprises of 111 landed homes and 10 street‐side commercial units, was completed in 2015 and more than half of the 111 landed homes have been sold as of end July.
The transaction is expected to yield net divestment gains of about RMB 368.5 million ($75 million) upon completion by end September.
Keppel says this is in line with the group’s strategy to recycle capital and rebalance its portfolio to focus on high growth cities.
In addition, Keppel is selling 5%, or half of its current 10% stake, in the world’s first FLNG conversion - Hilli Episeyo to Golar LNG Partners LP (Partnership).
This is in conjunction with Golar LNG (Golar)’s Master Limited Partnership structure for the Partnership to acquire an equity interest in the vessel.
The divestment gain to Keppel is expected to be in the range of US$17-19 million ($23-26 million) based on the indicative selling price.
See also: RHB still upbeat on ST Engineering but trims target price by 2.3%
Keppel acquired the 10% stake for a mere US$50 consideration in Sept 2014, and as part of the deal, Keppel extended a shareholders' loan of US$21.7 million to Golar Hilli then.
Upon completion, which is expected to be by April 2018, Keppel will continue to hold a 5% stake in Hilli Episeyo, and 10% interest from cash flow generated from the vessel.
“Keppel’s stake in Hilli Episeyo strengthens the alignment of strategic interests between Keppel and partner, Golar, and reflects Keppel's confidence in the prospects of FLNG vessels,” says analyst Ho Pei Hwa in a Friday report.
Golar is expected to activate the construction of second FLNG vessel contracted with Keppel in the next few months.
As ar 3.50pm, shares in Keppel are trading at $6.33.
