Here's why Keppel need not divest in the near term

Realised losses could outweigh generated cash.

MayBank KimEng assessed if Keppel needs more cash, whether it could sell non-core assets or take on more debt. It found out out that other than possibly selling M1 and the T27 data centre, it sees low odds of Keppel divesting traditional suspects near term.

"Should it face a cash crunch, we think M1 is the most likely divestment choice. We estimate this could free up SGD342m of cash at the current market price," it said in a report.

According to MayBank, their telco analyst is negative on M1 due to the threat of new entrants. If Keppel shares this view, it may be a reason to divest, and it would still realise a gain of c.SGD196m (SGD0.11/sh), it adds.

Furthermore, even though it views KrisEnergy or Dyna-Mac as non-core, the research firm sees low odds of Keppel divesting as they could generate only c.SGD82m of cash at the current market value, but c.SGD487m of realised losses.

"We view Keppel REIT, Keppel Infrastructure Trust, and Keppel DC REIT as core assets that facilitate capital recycling. It may pare down its 46% stake in Keppel REIT, but that could lead to a disposal loss at this time," says MayBank.