SINGAPORE – Keppel has reported a robust performance on all operating fronts for the first quarter of 2024.
Recurring income grew 51 per cent, thanks to higher contributions from both asset management and operating income, while net profit – excluding the effects of legacy offshore and marine assets – grew steadily.
But when the effects of legacy offshore and marine assets are included, net profit was lower year on year. The company did not reveal actual profit figures during its voluntary business update on April 25 for its financial first quarter.
The legacy assets’ effects include the profit and loss effects from Seatrium shares.
The company’s asset management fees grew 52 per cent year on year to $88 million during the quarter, with improvements in all three segments – infrastructure, real estate and connectivity.
Addressing media and analysts, Keppel chief executive Loh Chin Hua said in the year to date, the company had monetised about $170 million in assets, including the proposed divestment of a residential project in Wuxi, China. This brings its cumulative asset monetisation since October 2020 to more than $5.5 billion.
During the quarter, Keppel also received a cash payment of $71.3 million from Asset Co.
Keppel’s revenue was $1.5 billion for the first quarter ended March 31, compared with $1.6 billion in the previous corresponding period.
Its net gearing was 0.90 times as at March 31, unchanged from that as at Dec 31, 2023. As at end-March, about 64 per cent of Keppel’s borrowings were on fixed rates, with a competitive average cost of funds of 3.81 per cent and a weighted tenor of about three years.
Mr Loh said Keppel started 2024 on a good footing, riding on the momentum of its transformation into a global asset manager and operator.
“Our recurring income surged 51 per cent year on year, propelled by strong improvements in asset management and operating income in the first quarter of 2024. We are also progressively de-risking our investments,” he said.
Mr Loh also gave an update on Keppel’s acquisition of European asset manager Aermont Capital. It has received the clearance required to close the first of two phases of the €931.86 million (S$1.35 billion) buy. He said: “We are now working towards completing Phase 1 by the end of this month. This would grow Keppel’s funds under management to about $79 billion, or close to 80 per cent of our interim target of $100 billion by 2026.”
He added that amid the volatile environment, Keppel continued to see exciting opportunities as investors’ growing preference for defensive, cash flow-generative assets is driving demand for alternative real assets in infrastructure and private credit, where Keppel has strong expertise.
“With the DNA of an asset manager as well as deep operating capabilities, we can create alphas for the funds that we manage, and reinforce Keppel’s unique value proposition to our global limited partners,” Mr Loh said.
An alpha is a business term that refers to an investment strategy’s ability to beat the market.
Analysts have generally responded positively to Keppel’s transformation. In a report on the evening of April 25, CGS International reiterated its “add” call on the stock at an unchanged “sum-of-the-parts” target price of $8.98, citing the company’s strong recurring income growth and sizeable divestment pipeline.
