Keppel posted quarterly loss of a staggering SGD 697 million. This is mainly due to impairments of SGD 919 million from O&M segment.
Excluding impairments, the company still reported quarterly net profit of SGD 222 million, boosted by other segment of the business such as property, infrastructure and investments.
Last year Temasek proposed offer of SGD7.35 a share (including SGD0.15 dividend declared after the proposal date) of SGD4 billion to raise stake to 51 percent.
This partial offer has a condition called Material Adverse Change (MAC) clause, stating that Keppel profit after tax must not fall more than 20% or below SGD557 million over the combined of four quarters from 3Q2019.
Keppel current cumulative PAT until End Jun2020 is minus SGD165 million. This mean that to meet this condition, 3Q 2020 result must be at least SGD887 million. This is highly unlikely considering Keppel past years average quarterly profit hovered around SGD200 million.
This means that Keppel will not meet the MAC clause and Temasek can either:
· cancel its offer?
· waived off the clause?
· Re-offer a lower price?
Will Temasek offer of SGD7.35 a share goes on?
The decision will be made known by end of August?
Share price of Keppel is SGD5.18 (at time of writing) with a P/BV of 0.9. During early 2016 oil crisis, Keppel PB dropped to 0.82 or SGD4.88. Covid March low is SGD4.82.
In my opinion, Temasek will continue with the offer amid a lower price. I may be wrong! Just my feel.
Eventually, I feel that Temasek will want to repeat the proposal for Sembcorp to Keppel, i.e. to de-merge O&M businesses.
Question is when?
I always picture that Temasek is liken to be our “Father” and SG Government is like our “Grand Father”!
Anyway, Temasek will always have or want control over the main companies in Singapore which forms the pillars of the country’s business. For e.g. Temasek has major shares in Financial institution (DBS), Transport (Comfort Delgro, SBS, SIA, SATS), Tele-communication (Singtel, Starhub, M1), Media (SPH), Properties (Capitaland, Ascendas, Mapletree) Technology (ST), O&M, Infrastructure (Keppel and Sembcorp) etc.
And then in bad times, Temasek will always come to the rescue of his son, just like Singapore government coming to rescue of Singaporeans during the Covid crisis. Sounds good huh… Blessed huh…
Good? (or maybe Bad?)
There is always someone to depend on, be it Singaporeans depending on the country, or major important businesses in Singapore depending on Temasek. In the short term, it seems great to have someone always protecting you behind the scene.
In the long run, or perhaps one day, what if the Father or the Grandfather will not be around, or they themselves also become weak. Then how…?
Sometimes I felt that we Singaporeans are like under-aged kids that will never grow and never be independent. We are always under our Grandfather or Father’s safety shelter net. No matter how old the child is, he/she will always be under the father’s monitoring and supervision at all times.
The child will never be able to go on his/her own adventure to seek for what he/she really want. Creativity and independence and survivor of the fittest seems a distant reality. Comfort zone sets in. The child rarely dares to voice out his/her own opinion, since the father’s opinion always overwrites his/hers.
The child’s role is just to be obedient and please the father. Failure is deemed incompetent, while elsewhere, failure is the opportunity to learn and grow.
The Grandfather or father will be forever be controlled in the child’s financial well-being. The child will always depend on the father for direction, guidance and advices. He/she will always be deemed incapable of looking after himself/herself and always seem incompetent of making informed decisions for his/her own well-being.
When child gets into trouble, the father will always come to the rescue!
Within the country, the child will think highly about himself/herself. But in the real outside world, he/she will be lost in the jungle, if, without his/her “Grandfather” or “Father” ‘s safety shelter net.
Ok … maybe I am over-exaggerating…
Bad (but maybe Good?)
In the past, I use to be very upset about my family being so poor, seeing my friend having their own bed and their own room, while all of us sleep on the floor and we do not even have a proper table to do my homework. Luckily we always have good neighbours and relatives who will support us for our school textbooks and uniforms, and our Chinese New Year new clothes.
We were without a HDB of own, as we stayed in no-living-room rental flat followed by one bedroom rental flat. My mum always have financial difficulties even to buy food from market as our household income is less than SGD800 even until late 1990s. Minus the gambling advance pay from boss, my Dad was only left with SGD500-600 a month. Yes, no CPF at all.
I am always out in the streets and like to stay whole night up in a “mess-room” playing snooker and street fighters or sleep over at friend’s house.
Looking back now, it does seem to be a blessing in disguise. And that is really how I learn to be street smart. On the flip side, it can also mean ending up in jail, like many of childhood friends.
As a Father myself
I will never want my children to follow my childhood footsteps. At the same time, I will be careful not to let them be over-dependent on me. I wouldn’t want to control their life forever. I will want them to be creative, be themselves and speak up for what they believe in. However, I will make sure that when they are young, they will be properly guided by the good fundamental principles of life.
When you learn from mistakes and become stronger, it is great. But as children at younger age, there is also possibility that they are learning the wrong things and take the wrong path and never recover again!
I come out with the “Door Analogy”.
Sometimes your child will only see one door which is straight ahead and walk through it. They may fall right through into the shit hole! As parents, I will tell them to look broader and let them understand that there are actually two more doors beside the one they had seen. Which one to choose is up to them, but at least, we widen their perspective! If they still decide to take the shit hole door, then they must be responsible for their action.