Keppel’s 2022 Results Within Expectations; Proposed O&M Merger With Sembcorp Marine On Track

We keep Keppel’s fair value estimate at SGD 9.40 following its in-line 2022 results. We believe Keppel is attractive now, underpinned by its diversified business while its Vision 2030 strategy will continue to unlock value of its assets. Sembcorp Marine, or Sembmarine, will hold an extraordinary general meeting on Feb. 16, 2023, to vote on its proposed combination with Keppel Offshore and Marine, or Keppel O&M, and we expect the deal to be approved by shareholders. Hence, we move Sembmarine’s Morningstar Uncertainty Rating to High from Very High, as we think the combined entity will enhance Sembmarine’s future earnings given the larger scale and stronger order book. Sembmarine expects the transaction to be completed by Feb. 28, 2023, while Keppel will distribute 19.1 Sembmarine shares to its shareholders for every one Keppel share they hold subsequently.