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Keppel Corp shares made strong gains this week. After retail investors gave the group the thumbs up over its development plans for the Keppel Bay area.
The counter hit a record high of $17 on Thursday, on a volume of 3.81 million, before profit-taking yesterday caused its share to slip 20 cents. It ended at $16.80 yesterday, up $1.10 for the week.
The conglomerate's decision to further up Singaporeans’ strong demand for plush waterfront living at Keppel Bay was a surprise that made waves in the market, a dealer said.
Kim Eng Securities senior investment analyst Rohan Suppiah said: "The news came as a bit of a surprise to the market."
He said most investors had thought the development of Keppel Bay had been completed with the construction of the first condominium there, Caribbean@Keppel Bay.
However, Keppel said on Tuesday that it will launch Keppel Bay phase two - a 1,200-unit waterfront condo - early next year.
The condo will be part of the 4.86 million sq ft Keppel Bay mega development, which is 70 per cent owned by Keppel and 30 per cent owned by its unit Keppel Land, Singapore's No.3 developer.
Keppel Corp is also likely to build exclusive villas on the 5.3ha Keppel Island that it owns in Keppel Bay, which has a shipyard until 2000.
Mr Suppiah expects apartments of Keppel Bay's latest condo to sell for much higher prices than those in the first. He said he might raise his target price for the stock once he sees sustained growth in earnings for the industrial and property conglomerate.
"There is room for upward revaluation," he said of his target value of $17.20 for Keppel.
Meanwhile, Citigroup also raised Keppel's target price to $21.20 from $20.40.
Citigroup said Keppel rates highly with its strong governance. It also sensed "greater confidence in the management's tone".
Besides the property play that gave Keppel its share price boost this week, the recent rebound in oil prices also helped to lift the stock.
Analysts see Keppel as an oil-related stock, as it is the world's largest offshore rig builder.
Crude oil prices rebounded this week to nearly US$60 a barrel from a low of US$55 last week.
Keppel should trade near its peak as "exploration and production activities of oil majors remain robust and inquiries for building new rigs remain strong amid a buoyant market", a dealer said.
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