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04.07.11.MICC.General.Body_.Meeting.Slides

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04.07.11.MICC.General.Body_.Meeting.Slides Powered By Docstoc
					General Body Meeting 04.07.11
    Agenda
2


       Announcements
       News Updates
       Industrials Sector Pitch




                                   Mutual Investment Club of Cornell
3




    Announcements




                    Mutual Investment Club of Cornell
    Senior Analyst Applications
4


       Senior Analyst Application for Fall
         Take   Charge of a Sector
       Applications open TODAY

                       Deadline: Friday 4/15




                                      Mutual Investment Club of Cornell
5




    News Updates




                   Mutual Investment Club of Cornell
Unemployment
             Good…                         …Bad
   US unemployment rate dips     45.5% out of work 6+
    to 8.8% in March               months; 4x average
                                   since 1970s (~6 million)
   Payrolls up 216,000; +
    230,000 private               64.2% in labor force;

                                   lowest in 25yrs
   12 consecutive months of
    private sector job growth     March avg. workweek

                                   and avg. hourly earnings
   March avg. workweek and
                                   flat
    avg. hourly earnings flat




                                Mutual Investment Club of Cornell
    The Budget Basics
7


       Barack Obama’s plan for 2012 Budget
         Jobs, health care, clean energy, education, and
          infrastructure will be priorities.
         Estimates:
           Total Revenue = $2.627 trillion
           Total Expenditures = $3.729 trillion
           Total Deficit = $1.101 trillion

       For Specific Information:
         http://www.whitehouse.gov/omb/budget



                                      Mutual Investment Club of Cornell
    Recent Budget News
8

     Republicans seem to be taking this time to pressure the democrats
      into enormous budget cuts.
      House Republicans move ahead with a one-week extension
        Includes more budget cuts that the White House has already
           rejected
     The government authority to spend money runs out on Friday night***
           Yesterday afternoon President Obama called a nighttime
            conference
           Discuss the current stalemate between the two parties as to
            where and how to cut the spending
               The key opposing republican figure is Mr. Boehner
          • Possible shut down of government spending on Saturday
              • 800,000 federal employees could be laid off
              • National Parks and the Smithsonian would potentially close




                                        Mutual Investment Club of Cornell
    2012 Presidential Election: What to Expect
9


       Based on pre-election polling republicans seem to
        be making strong progress
       If Republicans take office then there is a strong
        chance that there will be significant budget cuts
       Either way, in the near future it appears that there
        will have to be bipartisan support for budget cuts




                                 Mutual Investment Club of Cornell
     Tech Supply Chain
10


        8.9 Earthquake in Japan: major impact on Tech
         supply chain

        Disruption for Japanese companies
            Sony: closed 6 factories, 1 semiconductor plant
            Panasonic: suspended a hybrid car battery JV
            Sharp, Mitsubishi, Sanyo & Panasonic: unspecified major disruptions
            Nikon, Fujitsu (6/11 factories affected), Casio, Hitachi: scaling back
             operations
            Renesas: 7/22 factories shut (top NAND producer)



                                               Mutual Investment Club of Cornell
     Tech Supply Chain
11


        8.9 Earthquake in Japan: major impact on Tech
         supply chain

        Disruption for foreign companies
            TI: semiconductor factory heavily damaged
            Apple: components from Toshiba (NAND), Elpida (DRAM), Asahi Glass
             (screen), and AKM (compass)


        Most affected components
          Semiconductors,      NAND, DRAM, LEDs


                                           Mutual Investment Club of Cornell
     Tech Supply Chain
12


        Direct Factory Damage
        Rolling Blackouts
          Forcing Japanese tech companies to scale back
           operations (will continue through summer)
          High precision fabrication plants require stable,
           reliable power
        Transportation Difficulty
          Destruction of roads, infrastructure
          Debris, clearing of areas hit by disaster



                                     Mutual Investment Club of Cornell
     Tech Supply Chain
13


        Apple Impact?
          Apple has tremendous power in the supply chain,
           frequently orders very early
          Likely to be least affected by component supply shortages
           in NAND, DRAM
          There may be an effect on specialized components

        Consumer Impact?
          Tech prices very unlike oil, slow to react
          Component price hikes will first hurt component buyers,
           impact on end-consumers will be small (if any arises)


                                      Mutual Investment Club of Cornell
     Japan Disaster Impact on Luxury
14


     •   Japan represents 23% of world market for hard/soft
         luxury goods
     •   Burberry shares down 5% in days after earthquake
     •   Analysts cite weaker consumer sentiment in the nation as
         well as a huge community awareness of conspicuous
         consumption
     •   The effects on the world economy still unclear and global
         consumer sentiment has been shaken as well




                                      Mutual Investment Club of Cornell
15


        Still some optimism remains with growing Chinese
         market and a hope for quick recovery in Japan
        Shares have been experiencing extraordinary
         growth in the past year with stellar performance
         from leading brands such as Burberry, LVMH and
         Tiffany’s.




                                 Mutual Investment Club of Cornell
     Procter & Gamble sells Pringles
16


        PG announced the sale of the Pringles brand of chips to
         Diamond Foods in a deal valued at $2.35 billion which
         includes Diamond Foods paying $1.5 billion in stock and
         assuming $850 million of Pringles’ debt on April 6
        The divestiture is the final piece of the company strategy to
         exit the food business and focus on its core businesses of
         beauty, health and home products
        The deal values Pringles at an enterprise value of 1.6X
         revenue and at 9.8X EBITDA, in line with comparable
         companies in the industry



                                        Mutual Investment Club of Cornell
David Sokol Resigns from Berkshire
Hathaway
   David Sokol has resigned from Berkshire
    Hathaway as of March 28th 2011
   Formerly Chairman, President and CEO of NetJets
    and Chairman of MidAmerican Energy Holdings
    Company
   Was considered a likely favorite to take over
    from Warren Buffet (80)
   Resignation came as a shock to many Berkshire
    employees and Buffet also emphasized that it was
    “unusual”
                           Mutual Investment Club of Cornell
David Sokol Resigns from Berkshire
Hathaway
   Class A shares of Berkshire Hathaway fell more
    than 2 percent after resignation
   Resignation could be due to Sokol’s personal stake
    in Lubrizol which he successfully pitched to the
    Berkshire board
   SEC has not filled any charges and Buffett does
    not feel this is an issue of insider trading
   Sokol cited personal reasons in his letter of
    resignation

                            Mutual Investment Club of Cornell
19




     Keppel Corp. (BN4.SI) & (KPELY.PK)
                  David Wong
                 Alan Calabrese
                  Nick Hosseini
                    Daryl Lin
                 Marshall Verdi

                        Mutual Investment Club of Cornell
     Thesis
20


        High growth potential in core segments
        Well diversified firm
        Exposure to high GDP growth Asian economies
        Extremely strong pipeline of orders and contracts




                                 Mutual Investment Club of Cornell
21




     Corporate Structure

                   Nick




                     Mutual Investment Club of Cornell
     Keppel Corp.
22


        Diversified Mid/Large-Cap conglomerate
         with 4 main subsidiaries
                              2010 Net Income Breakdown
                           3.5%


                                                   Offshore & Marine
                   23.0%
                                                   Infastructure
            4.0%                                   Property
                                   69.6%

                                                   Investments


                                        Mutual Investment Club of Cornell
Geographical Distribution
               2010 Geographical Breakdown


                1%
               0%
                         19%
                                         No rth Am e rica
                                         So uth Am erica
                                         Euro pe
    40%
                                         C hina a nd Ho ng Ko ng
                               11%       Ja pa n a nd So uth Ko rea
                                         Middle Ea st
                                         So uthe a st Asia
                                         India
                                         Austra lia
          3%             20%
          1%
               5%


                               Mutual Investment Club of Cornell
     Offshore and Marine
24


        World’s largest offshore oil-rig offshore rig design
        Rig construction and repair
        Ship repair and conversion
        Specialized shipbuilding company
        Full-solution provider-design, construct, and
         maintain offshore rigs




                                  Mutual Investment Club of Cornell
Real Estate
   Assets in Asia with 2 core business
     Keppel    Land
       Real   estate investment and development
     Keppel-Real      Estate Investment Trust
       Property   fund management with $10.2Bn AUM
   Geographically diversified in the Asian economies
    of Singapore, China, Vietnam, India, Indonesia




                                   Mutual Investment Club of Cornell
Infrastructure
   Keppel Integrated Engineering
                  engineering, cooling service provider in
     Environmental
      Singapore, Waste-to-Energy plants, facilities
      management
   Keppel Energy
     Powerplants in Brazil, China, Philippines, Nicaragua,
      and much of Singapore
   Keppel Telecommunications & Transportation
     Leading  service provider in Southeast Asia and
      Europe, spanning 12 countries.


                               Mutual Investment Club of Cornell
Investments
   k1 Ventures
     Diversifiedinvestment company with stakes in
      companies across key diverse sectors of
      transportation leasing, education, oil and gas
      exploration, and automotive retail
   M1 Limited
     Leading  integrated communications service provider
      in Singapore with >1/3 Singapore market share




                               Mutual Investment Club of Cornell
28




     Offshore and Marine

                 Marshall




                     Mutual Investment Club of Cornell
     Oil and Gas Drilling
29


        Oil extraction off the coast of continents
          Also    includes drilling in lakes and inland seas
        Much more expensive than traditional onshore oil
         drilling
          Becomes      cost effective as the price of oil continues to
           rise
        Poses numerous environmental hazards
          Oil    spills, destruction of aquatic habits, etc.
          BP



                                         Mutual Investment Club of Cornell
     Offshore Drilling
30


        Largest spending in Gulf of Mexico, West Africa,
         Brazil, and Asia Pacific
        Industry expected to grow at 6.6% between 2009
         and 2015
        Depletion of onshore reserves driving growth in
         offshore drilling
          Also driven by improvements in seismic and drilling
           technologies



                                    Mutual Investment Club of Cornell
     Offshore Drilling
31


        Current growth being driven by deep and ultra
         deep oil exploration and production
        Huge deep water reserves found in various parts
         of the world
          Gulf   of Mexico, Brazil, Asia Pacific
        Shallow water resources beginning to decrease
         causing companies to look to deeper reserves
          Facilitated   by new technology



                                       Mutual Investment Club of Cornell
     Main Projects
32


        Offshore Division
          Keppel   FELS
            Leading  designer and builder of high-performance mobile
             offshore rigs
        Marine Division
          Keppel   Shipyard
            Trustedindustry name for the repair, conversion and
             upgrading of a diverse range of vessels




                                      Mutual Investment Club of Cornell
     Keppel FELS
33


        Successfully delivered almost half of the world's
         newbuild jackup rigs and semisubmersibles in the
         past decade
        April 3rd , secured a new contract worth $180
         million
        Have also patented several critical rig components
         including jacking, fixation, self-positioning and
         skidding systems



                                 Mutual Investment Club of Cornell
     Keppel Shipyard
34


        Leaders in the conversion of Floating Production
         Storage Offloading (FPSO) units, Floating Storage
         Offloading (FSO) vessels and Floating Storage
         and Regasification Units (FSRU)
        March 10th, secured $133.7 million contract for
         two fast track projects




                                 Mutual Investment Club of Cornell
     Overall Success
35


        Successfully delivered 34 projects including 12
         rigs on time and within budget in 2010
        In 2010, Keppel FELS partnered with Seafox, a
         leading fleet owner and operator, to
         commercialize a new wind turbine installation
         vessel design for deeper water
        Joint venture with J Ray McDermott also secured a
         $1 billion contract from Brazil for its tension leg
         wellhead platform

                                  Mutual Investment Club of Cornell
     Future Growth
36


        Clinched $3.7 billion worth of new orders with
         deliveries extending to 2014
        Exploration and production budgets are expected
         to increase by 15-20% on average in 2011, with
         oil planning prices in the region of $70 per barrel
        According to Douglas Westwood, the world will
         need more than 100 Floating Production Systems
         (FPS) to be installed between 2010 to 2014
          This   is equivalent to a value of $45 billion


                                       Mutual Investment Club of Cornell
     Contract Increase
37




                         Mutual Investment Club of Cornell
     Financial Performance of O&M
38


        O and M’s revenue and profit after tax and
         minority interest represents 69% of Keppel
         Corporation’s business.
        Profits in 2010 increased by 22%
          SGD$810    million to 987 million
            Due to improved operating margins driven by cost
            efficiencies and higher productivity on delivered contracts




                                      Mutual Investment Club of Cornell
39




     Property

                Daryl




                   Mutual Investment Club of Cornell
     Real Estate
40


                                     Keppel Corp


                O&M           Real Estate    Infrastructure    Investment
                                                                 Holding

               Property Investment & Investment

                             Keppel Land


                         Fund Management

                 ALpha                                         K-REIT

     Vision: To provide urban living solutions through the twin core businesses of
     property development and property fund management
                                             Mutual Investment Club of Cornell
     Business Model
41


        Joint ventures, M&A, and strategic partnerships
          When expanding into new cities in Asia

        Focus on developing quality residential, township, commercial
         projects in fastest growing cities
          Tianjin, Chengdu, Shanghai, Saigon, Ho Chin Minh,
            Bangalore, Kolkata
          Recently Established Keppel Land China

        Policy of capital recycling
          Take on large-scale development projects

          Increase residential development pipeline



                                       Mutual Investment Club of Cornell
     Joint Ventures/Strategic Partnerships With Local
     Companies
42




                             Mutual Investment Club of Cornell
     Drivers of Asian Real Estate Growth
43




                      Mutual Investment Club of Cornell
     Expansion Into Fast-Growing Cities
44




                      Mutual Investment Club of Cornell
     Expansion Into Fast-Growing Cities
45




                      Mutual Investment Club of Cornell
     Leveraging Singapore’s Position as
46
     South-East Asian Financial Hub
        Singapore government wants to make Marina Bay a seamless extension
         of the existing Central Business District(CBD)
        Record pre-commitment for commercial office space
                          FY10          FY09

               MBFC       66%           55%

               OFC        80%           63%




                                           Mutual Investment Club of Cornell
      ‘Capital Recycling’ Policy
47


         $826mil Asset Swap in 2010
              Pre-Sold Commercial/Industrial         Maximize value creation
              Office Space(OFC)
                                                      through continued profits
     Keppel
      Land                                            from capital
                                         K-REIT
                                                      appreciation of
                                                      commercial properties
                                                     Assets are optimally
                                                      utilized to unlock value
                Increase
               Residential
                pipeline




                                                  Mutual Investment Club of Cornell
     Fund Management
48
    Total $11.2bn AUM of prime industrial and commercial
     office space                                   FY’11(F)(yoy) FY’10(yoy)
                               Leasing                 15-18%       21.4%
    K-REIT                    Income
      Stable income growth    Distributable Income    15-18%        20.6%
    Alpha Investment Partners
      Manages funds of Grade A office space & shopping malls




                                       Mutual Investment Club of Cornell
     KepLand
49




                              Net Profit:274.2mil

               Mutual Investment Club of Cornell
     Earnings Comparison (yoy)
50




                      Mutual Investment Club of Cornell
     Geographical Breakdown
51




                    Mutual Investment Club of Cornell
     Strong Balance Sheet
52




                       Mutual Investment Club of Cornell
     KepLand Loan Maturity Profile
53




                     Mutual Investment Club of Cornell
     Property-Summary
54


        Focus on large-scale townships and integrated
         lifestyle developments
        Leverage Singapore’s growing significance as a
         Financial Hub
        Strategically positioned for Market Upturn
        Sound Financial Position
        Opportunities for synergies with
         Infrastructure(environmental engineering)
         subsidiaries

                                 Mutual Investment Club of Cornell
55




     Infrastructure

                      David




                         Mutual Investment Club of Cornell
     Infrastructure
56


        Continue to leverage core competency of waste
         and water treatment
        Keppel Energy
          Singapore:   $900MM expansion of 2 plants (2013)
        Strength in green technology
        Keppel Telecommunications & Transportation
          Logistics

          Data   centers


                                    Mutual Investment Club of Cornell
     Waste-to-Energy (WTE)
57


        Only private operator of WTE plants in Singapore
          Handles   half of the incineration of solid waste
        Played key role in the privatization of the EU’s
         Greater Manchester WTE plant in 2009
          Awarded   initial contract to design, build, and provide
           technology for the plant
          Keppel was awarded the contract for phase 2 of the
           project as well
        Qatar, China, Belgium, Sweden, UK, Germany,
         Italy, & Korea
                                      Mutual Investment Club of Cornell
     Keppel T&T-Logistics
58


        Logistics strengths
          Large growth in Singapore, China, and Vietnam
          Renewed long-term contracts with key partners:
           Affymetrix, Trane, M1, Nestle, Brother & Carrefour
          Inroads into new markets: biomedical and pharma

          Upgraded its warehouse & transport management
           systems coming online in 2011
        Logistics companies require shipping volume to be
         profitable
          Susceptible   to slump in transportation demand
                                      Mutual Investment Club of Cornell
     Keppel T&T-Data Centers
59


        100% occupancy at top tier data centers
        Securus Data Property Fund
          Shariah-compliant   fund ($100 MM) to buy assets
        Data center business may suffer from slump in IT
         spending
          ITconsulting spending expected to increase 2.6%
           between 2009 and 2014




                                     Mutual Investment Club of Cornell
60




     Investment

                  David




                     Mutual Investment Club of Cornell
     K1 Ventures
61


        Invests in transportation leasing, education, oil &
         gas exploration, and automotive retail
          80.1%     Helm Holding Corp
            Rail   equipment leasing company
          12.2%     Knowledge Universe Holdings
            Singapore,   UK, Canada, Malaysia
          McMoRan      Exploration Company (2.3 MM shares)
            Gulf   oil and gas company
          China    Auto ($12.3 MM) & ChrysCapital ($3 MM)


                                          Mutual Investment Club of Cornell
     M1 Limited
62


        Growing mobile broadband and smartphone
         customer base
        First in Singapore to provide ultra-high speed
         broadband on the nation fiber network
        Enhance service offerings
          Application store
          Free fixed voice service for broadband customers

          Boosted non-voice service revenue




                                   Mutual Investment Club of Cornell
     Environmental Investments
63


        Subsidiary K-Green Trust well poised to capture
         growth in green technology
          Investsin green infrastructure assets
          Focus on Asia, Europe, and Middle East

        Keppel Seghers provides technology solutions for
         environmental issues
          Expected  future global shortage of clean water
          Focuses on wastewater, solid waste, drinking and
           process water, biosolids and sludge


                                    Mutual Investment Club of Cornell
64




     Financials

                  David




                     Mutual Investment Club of Cornell
     Financial Summary
65


        Current Price: SPD$12.64
        Market Cap: SPD$10.15 B
        P/E (ttm): 12.53
        ROA: 8.48%
        ROE: 25.51%
        Current Ratio: 1.61
        Debt/Equity: 60.36%
        Debt/Assets: 19.39%
        Debt currently trading at ~3.5% YTM
                                Mutual Investment Club of Cornell
     Valuation-DCF
66


        Discounted Cash Flow Analysis
          Income    assumptions
                                    2011E     2012E     2013E
                 Sales growth       -1.5%     18.0%     9.5%
                 Operating profit   -4.0%     16.0%     10%

            Assumptions based on already received orders
            Expenses set at % sales based of historical numbers

          Perpetuity   growth: 3%-4%
            Share   Price: $12.72-$14.79



                                            Mutual Investment Club of Cornell
     Valuation-Multiples
67


         Sum of parts multiple analysis
                       O&M (70%)   Property (23%)    Infrastructure (4%)
              Keppel   Sumbcorp    Capitaland        Sembcorp              Weighted
                       Marine                                              Average
P/E ttm       12.53    14.42       13.13             12.17                 13.98
P/EBITDA      11.77    12.3        21.34             7.1
ttm                                                                        14.16
         Value based off P/E: $14.08
         Value based off EBITDA: $17.08



                                           Mutual Investment Club of Cornell
68




     Risks

             Nick




               Mutual Investment Club of Cornell
Risks-Offshore & Marine
   Oil Prices
     Oilrig production contingent upon market for oil
     Recent withdraws in the supply of oil

   Government regulations
             industry could be damaged by changing laws
     Drilling
      regarding offshore drilling
   Offshore rig orders are highly cyclical




                               Mutual Investment Club of Cornell
     Risks-Property
70


        Pricing bubble in certain Asian real estate markets
          Particularly   China
        Risk in lower than expected economic growth rates
          Slow   Chinese real estate growth
        Inflationary concerns
          Interest   rates




                                     Mutual Investment Club of Cornell
71




     Technical Analysis

                       Ali Yazdi
           Resident Technical Analysis Expert




                            Mutual Investment Club of Cornell
Channel Analysis




                   Mutual Investment Club of Cornell
RSI Juxtaposition




                    Mutual Investment Club of Cornell
SPY Movement




               Mutual Investment Club of Cornell
     Proposal
75


        Purchase 150 shares of KPELY.PK
          Total   purchase ~$3,000




                                      Mutual Investment Club of Cornell
     Questions?
76


        Purchase 150 shares of KPELY.PK
          Total   purchase ~$3,000




                                      Mutual Investment Club of Cornell
     Thanks for coming by!
77


     You are given a coin that comes up heads with some probability
     greater than ½ and less than 1.

     Can we use it to simulate an unbiased coin toss?




                                      Mutual Investment Club of Cornell

				
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