Kenon Holdings Ltd

Kenon Holdings Ltd. (NYSE: KEN) is a Singapore-based holding company that focuses on expanding businesses. The Company's assets range from established, cash-generating firms to early-stage startups. OPC Energy, a power generation corporation with facilities in Israel and the United States, is the company's core business. ZIM Integrated Shipping Services, Ltd., a global container shipping corporation, and Qoros Car Co., Ltd., a China-based automotive manufacturer, are both subsidiaries of the Company.

Key Highlights

• Kenon finalized the sale of 6 million ZIM shares for a total price of USD 463 million in March 2022. Because of the deal, Kenon currently owns 20.7 percent of ZIM and is the company's largest stakeholder.
• Kenon wants to reduce capital and distribute USD 10.25 per share (about USD 550 million) to shareholders (subject to shareholder and court approval).
• ZIM declared a cash dividend of USD 17.00 per share, totaling USD 2.0 billion, to be paid in April 2022. Kenon anticipates a payment of USD 503 million.
• Kenon Holdings reported full-year 2021 financial results on March 31, 2022.
  

Important financial highlights from Q1 FY22 Financial result

• ZIM results for the year ending December 31, 2021, are given below:
• ZIM's net profit for the year ending December 31, 2021, was USD 4.6 billion, up from USD 0.5 billion in 2020. In 2021, ZIM's Adjusted EBITDA was USD 6.6 billion, up from USD 1.0 billion in 2020.
• ZIM's revenues climbed by 169 percent to USD 10.7 billion in 2021, compared to USD 4.0 billion in 2020, owing to a rise in containerized cargo revenues, which reflected increases in both freight rates and carried volume.

• OPC results for the year ending December 31, 2021, are given below:
• In 2021, OPC's revenues climbed to USD 488 million (including USD 51 million from CPV), up from USD 386 million in 2020. (No contribution from CPV).
• In 2021, OPC's net loss was USD 94 million, compared to USD 13 million in 2020 (including a negative effect of USD 75 million related to early repayment of project finance debt and a net loss of USD 47 million given by CPV).
• In 2021, OPC's Adjusted EBITDA was USD 91 million, up from USD 75 million in 2020. In addition, in 2021, OPC's proportionate share of CPV affiliated firms' losses and EBITDA was USD 11 million and USD 106 million, respectively.
• Kenon's unconsolidated cash balance was USD 231 million as of December 31, 2021. Kenon's unconsolidated cash position was USD 504 million as of March 30, 2022, reflecting Kenon's January 2022 interim dividend and the sale of ZIM shares stated above. Kenon plans to have an unconsolidated cash balance of USD 982 million after receiving the ZIM dividend (net of tax) mentioned above in April 2022. At the Kenon level, there is no tangible debt.

Stock recommendation

KEN's stock price has gained 22.79% in the past six months and is currently in the middle of its 52-week range of USD 30.40 to USD 72.90.  The price since Corona’s correction in March 2020 has increased by almost 5.5x and is currently in a short-term correction phase after making an all-time high of USD 72.90 in March 2022. As can be seen in the chart below, the price is currently between short-term (50-day) SMA and long-term (200-day) SMA, while taking rejections on both ends. Short-term SMA has in the past acted as great support for the price, therefore as now it has been broken down, short-term SMA might act as a strong resistance.

Given the stock's considerable bullish momentum over the past six months, financial results, and technical analysis, we propose a "Watch" rating on the stock at its closing price of USD 55.93, as of May 31, 2022, with further analysis once price breaks either of the SMAs.

One Year Technical Chart, as of May 31, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Closing price as of May 31, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.

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