Is Keppel T&T cooking up a megaproject?

A sudden ramp-up in staff costs pulled earnings down by 107% in Q4.

For the fourth quarter, Keppel Telecommunications & Transportation (Keppel T&T) reported a dismal net profit of $300,000, due to one-off expenses from the logistics and datacentre segments.

However, the ramp-up in datacentre expenses hints at an upcoming mega project that could turn around the company's earnings, UOB Kay Hian said.

Its datacentre segment reported a 107% plunge in earnings in Q4 due to one-off ramp up staff costs.

UOB Kay Hian analyst Edison Chen said, "Looking at its development cycle and the increase in staff cost for 4Q17 (similar to KDC SG 4’s design and pre-engineering phase but on a larger scale), we are now more confident that a mega project is coming for Keppel T&T’s datacentre division."

Chen added that judging from the size of the increase in staff costs, this could be Keppel T&T's largest mega datacentre project yet.

"As datacentre demand remains hot, we believe that this new project will be well received and once completed, will be a new driver for Keppel T&T’s profit," Chen added.