2020 marks the year that I've invested in Kep Corp for a decade and this is the 6th stock in my Investing Portfolio after Genting, First Reit, SingPost, CapitaMall Trust and SIA in the "10-years club".
Probably nothing to cheer about given the price now is $4.28 (closing price on 18th Sep 2020) with reference to my holding price of $7.4156, a paper loss of 42.64%. However, that was offset by the dividend collected for the past 10 years, 49.10% to make it overall still a profitable investment for 10 years.
For these 10 years of holding, there were some key events going on as a shareholder. First, was given bonus share in 2010 as it helped to lower my initial investing price of $8.14/share to what it is today and K-Green Trust share when it decided to list it then. K-Green in 2014 was renamed Keppel Infrastructure Trust. It was later being acquired by CitySpring Infrastructure Trust in 2015 and further increased the holding of KIT due to the merger. This KIT share which I still holding has been relocated to my Kid's Portfolio to collect dividend. Next, in 2013, due to Kep Corp partial divestment of Kep Reit, as a shareholder, I was entitled to some quantity of Kep Reit unit. The Kep Reit unit which in 2015 using 孙子兵法 principles, I accumulated more quantity of it with a very low cost to make it a holding price of $0.2362/unit (coupled with FrasersCom Trust, MapletreeCom Trust, Mapletreelog Trust and CapitaR China Trust) and that was divested in 2019 (refer here) at a price of $1.2394/unit. Given all these events happened in the past 10 years, the picture is not as bleed as just looking at Kep Corp share price now.
Some would wonder why I didn't divest earlier while still have positive capital return few years ago. There are several reasons to it.
Firstly, as a long term investor, you don't make divestment decision solely based on profit or loss and as a long term investor, one must prepare to go through peak and trough of the market cycle.
Secondly, in 2015, Kep Corp's decision to privatize Keppel Land changed the basic fundamental of the company. In fact, I did make a good profit from Keppel Land privatization as just less than a week before the announcement I invested in Keppel Land at a price of $3.49 with CPFIS and get the privatization price of $4.38/share making a 25.50% profit in less than 3 months (refer here and here). I have a write up in 2015 for the privatization. Basically, after the privatization, Kep Corp has changed being highly focus in O&M (rig builder) to a more diversify company. This is good as it help to mitigate the reliance on crude oil. In fact when crude oil price crash happened in 2014-2015, the revenue from Keppel Land helped to cushion a drastic drop in its earning. As such, investing in Kep Corp is not longer about investing in O&M sector.
Thirdly, in 2019, Kep Corp made its second privatization on Keppel T&T to further diversify its business focus. The same year together with SPH, it bought over M1.
The blue print of the transformation was finally revealed in May 2020 -- Keppel Corporation Vision 2030. To summarize what this vision was about, Keppel Corporation plans to refocus its portfolio to be an integrated business, providing end-to-end solutions for sustainable urbanization. The company will focus on 4 key business areas -- Energy and Environment, Urban Development, Connectivity and Asset Management. With that, it made senses of all the acquisitions and privatizations prior to that. So investing in Kep Corp is no longer the same fundamental back in 2010. This is something as a shareholder am looking forward to.
Temasek Holding subsidiary made a partial offer to buy out Kep Corp share at $7.35/share in 2019 but in Aug 2020, it will not proceed with that due to a breaching of key term of the deal after Kep Corp posting a S$697.6M net loss for 2Q2020. Many talk about Temasek's intention for the partial offer is to eventually divest the O&M portion to Semb Marine to consolidate Singapore O&M sector. However, as a shareholder, I'm not so keen about Temasek's offer so the deal being called off didn't affect me either. I do agree Kep Corp and Singapore O&M sector in need of consolidation but I would like to see Kep Corp management do the restructuring rather than through a fund.
Given the current Covid-19 situation, there could be a delay in Kep Corp restructuring for its Vision 2030 target and this is something a shareholder must prepare for it. On the flip side, Covid-19 could be a catalysts to speed up the restructuring due the job cutting and retrenchment in the O&M section.
So comes 2030 if I'm still holding on shall be my 20th year in it and let see then has Kep Corp achieves its vision.
