Keppel's exit announcement from rig-building the easy part; execution will be tough

The Jan 28 announcement of Keppel Corp’s exit from the rig-building business should have elicited a positive response from the market. After all, ditching the loss-making business of its subsidiary Keppel Offshore & Marine (Keppel O&M) is a crucial step to reviving the company’s flagging fortunes since the 2014 crash in crude oil prices. But the market appears to think otherwise.

Shares of Keppel have since rolled back some of the gains made after the company announced a strategic review of Keppel O&M last year. The stock is down 11.5% to close at $5.07 on Feb 3 from the six-month high of $5.73 on Jan 21. This translates to 0.9 times its book value.

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