In today’s briefing:
- Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
- Sembcorp Marine and the Keppel O&M Business Combination – Brighter Light at the End of the Tunnel
- The Keppel Restructuring – Forward Sum Of The Parts Makes KEP Look Cheap. And It Is… But…
- Life Insurance Corp of India (LIC) IPO: Lower Issue Size & Valuation; Index Inclusion Timeline
- Renesas (6723 JP) – Salutary Q1, Strong Q2 Forecast, and a BIG Buyback
Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
- 20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
- The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
- Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.
Sembcorp Marine and the Keppel O&M Business Combination – Brighter Light at the End of the Tunnel
- Keppel Corp and Sembcorp Marine have announced the O&M business combination and it is a little more interesting than expected. It is a Very Big Desirable Order Book.
- Separately, there is the potential for more index inclusion flow based on the conclusion of the combination in Q4.
- The light at the end of the tunnel used to be far away, and one was never sure if it wasn’t an oncoming train. It’s closer and clearer now.
The Keppel Restructuring – Forward Sum Of The Parts Makes KEP Look Cheap. And It Is… But…
- The Keppel O&M / SMM Combination and Keppel Rig Asset Restructure were announced today and the arithmetic is both tough and interesting. There’s a little magic here.
- KEP shareholders receive SMM shares worth ~1/3 of today’s share price, and the rest is currently valued at well under Net Tangible Assets post-Restructuring/Transaction.
- That suggests Keppel has upside, but one must think carefully about the exposures.
Life Insurance Corp of India (LIC) IPO: Lower Issue Size & Valuation; Index Inclusion Timeline
- Life Insurance Corp of India (LIC) (1248Z IN) filed its Red Herring Prospectus (RHP) with SEBI yesterday to raise between US$2.61bn and US$2.74bn selling 221.375m shares (3.5% of the company).
- The stake sale will value Life Insurance Corp of India (LIC) (1248Z IN) at between US$74.4bn-78.3bn. This is 1.1x the Embedded Value and sharply lower than initial indications.
- Fast Entry inclusion to the MSCI India index will be a close call, while inclusion to the FTSE All-World Index, NIFTY Index and SENSEX INDEX will take much longer.
Renesas (6723 JP) – Salutary Q1, Strong Q2 Forecast, and a BIG Buyback
- About 9 days I ago I wrote Renesas (6723 JP) – On Top of Peer-Beating Growth, and Valuation… Watch for Buybacks. Today with Q1 earnings, they announced a ¥200bn buyback.
- What appears to be a quite strong Q1 in automotive in both revenues and margins, and decent incremental margins, sees a stronger Q2 forecast (but less good incremental margins).
- The Street is well behind guidance, and a buyback at the high end of potential guidance and coming earlier than expected is all to the good.
Before it’s here, it’s on Smartkarma
