Keppel Corp..... Update 2.0

 It is not easy to have an opportunity to acquire a great company at below intrinsic value. It's almost non existence during normal times, will be over rated due to market efficiency. Demands for great investment ideas exceeding what the market can supply. Only when the crisis come, the opportunity to buy great company at cheap valuation will appear. This COVID-19 had created that windows of opportunity now, so what are you waiting for? 

Today, I would like to provide an update on Keppel Corp which listed in Singapore Stock Exchange. Back in Oct 2019 last year, I have given my view on this stock why it is a good company to own, you can refer to the link below. Similar to my Facebook holding, I intended to hold this stock for longer horizon. However, I did changed my plan and sold it in Jan 2020 this year due to unfavorable world events unfolding. 

 Keppel. Bought at $5.84 lowest, sold at $6.80. (Recap from my Jan 2020 posting)

Previous posting links on Keppel:

Latest Results
Keppel reported a net profit of S$160 million for the first three months of 2020, 21% below the S$203 million for 1Q 2019, mainly due to an absence of gain from the divestment from a year ago. The revenue of S$1,857 million for 1Q 2020, which was 21% higher than that of 1Q 2019, due mainly to higher revenues from offshore & marine projects, property trading projects in Singapore, the power and gas business, and with the consolidation of M1. The latest result wasn't that great and the business transformation is still on-going. 

Temasek Support
On Oct-21, Temasek announced to buy 30% of Keppel at $7.35. The deal will boost Temasek’s stake in Keppel from 20.45% to 51% which also imply a premium of approximately 21.6% over lasted traded price $6.04 on last Friday May-8. The offer is still  valid pending acquisition approval from other countries. Temasek have to complete this deal within a year from announcement and it's only left 5 months from now to do so. I believe Temasek will make the offer announcement as soon as next month based on the strong stock price movements recently. The share price will continue go higher and higher in anticipation of good news release. 

COVID-19 crisis update
As the COVID-19 virus spread to more countries in March, Keppel share price fallen from $6.86 in Jan-13 to lowest $4.83 on March-24. Who would refuse for such a good deal from Mr. Market and taking advantage of it? I took this crisis as an opportunity to acquire a great company at great price and Keppel had become my target. I make a total of 6 buy transactions on Keppel Corp as the stock start to rebound from march low. With the lowest buying price at $4.83 and highest most recent bought at $5.91. It had become one of my biggest SG stock holding in my portfolio now with 7% in total. 

My trading Plan
Dig in and relax. I believe the "Armageddon" case for this company already over. Now with the COVID-19 crisis at the peak and oil price at the lowest, what could be worst than this scenario? With the annual dividends and imminent Temasek's offer in the horizon, I just have to keep it in the "safe box" and enjoy the sunrise. As no one can predict the top and the bottom of any share movement, I could only guess that the share might be trading between $6.40 to $6.80 post offering. This is just my own opinions and I'm not encouraging you to buy at this price today.   
My thought
This crisis is a "once-a-decade" opportunity to acquire great companies at cheap valuation and we shouldn't let this go to waste! We shouldn't wait until the crisis resolved or the vaccine is ready before start investing. I know it is not easy to invest during crisis when everyone is panic selling. You may have doubt whether you doing the right thing when others going for the opposite. There is nothing wrong to be contrarian in investing. I had been contrarian in trading for last 5 years and I can tell you it had produced some the best returns in my entire investing career. 


Disclaimer: All investment come with great risk and should proceed with cautious. This is not an advice to buy or sell any stock. It is important to do your own research and analysis before making any investments.

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Keppel Corp..... Update 2.0

  It is not easy to have an opportunity to acquire a great company at below intrinsic value. It's almost non existence during normal ti...