A key part of being a sound and informed investor is to really read financial statements properly and 'between the lines'.
It was posted that the net profit increased by 6% compared to the same period in 2014. I find that this figure is not meaningful as they used "profit attribute to shareholders" and not "operating profit. "
This is my analysis:
1. Operating profit dropped YOY
Operating profit dropped year on year. Looking at the red box figures below, the drop is about 4%.
Operating profit dropped Quarter on Quarter. I thought I saw wrongly when I compared the 4th Qtr of 2014 to the 1st Qtr of 2015.
This is the 4th Qtr 2014 results:
Take a look at the 1st Qtr 2015 Results:
That's like a 57.2% drop!? I am not sure whether this is seasonal so I would not really be overly concerned about this, albeit I would take a more cautious outlook.
3. Order book is disappointing
I get that oil prices have fallen drastically, and the oil and gas sector is not looking good now. But the new contracts secured so far for 2015 hasn't been assuring. It is only $0.5B so far..2015 has another 9 months to go and I don't foresee a miracle happening for new contracts being secured.
4. Other sectors not performing as well too
Keppel group comprise of 4 main sectors- Offshore and Marine, Property, Infrastructure and Investments.
Offshore & Marine: Dropped 17%
Property: Dropped 22%
Infrastructure: Dropped 26%
Investments: Increased by almost 6 times
The only redeeming factor was Investments, which they have attributed it to 'the sale of investments'.
The worst performing segment was Infrastructure which was due to a lower contribution from the power and gas businesses.
5. EPS increased
EPS has increased to 19.8cts, compared to 18.7cts for the same qtr 2014. I would take this with a pinch of salt though.
Conclusion:
It is no wonder that by the time you see this, Keppel Corp stock price has fallen to $9.27 (it was trading at $9.4+ before the announcement of results).
Haizzzz. Don't look promising as their business is highly dependent on oil (Offshore+ Infrastructure).
I shall wait for the 2nd qtr results before purchase. Perhaps I am looking into a $8+ (low) price now before entering. Unless Mr Oil price is up again.
