SINGAPORE – Keppel Corporation recorded a strong performance over the past nine months that has helped it cross the upper end of the three-year asset monetisation target it set in late 2020.

The firm noted at Thursday’s voluntary business update for the nine months to Sept 30 that net profit from continuing operations grew year on year, bolstered by stronger results from the infrastructure and connectivity segments.

Earnings for the third quarter were stronger than for the same period in 2022, with all key business segments – infrastructure, real estate and connectivity – registering improvements. 

Revenue from continuing operations for the nine months to Sept 30 was $5.27 billion, up 5 per cent from the same period in 2022, with notably higher contributions from the infrastructure and connectivity segments.

As at Sept 30, the infrastructure division saw 100 per cent of Keppel’s customers locked in with fixed or indexed electricity price plans for the next two years.

The division secured more than $1.3 billion of new energy-as-a-service contracts in the nine months, bringing Keppel’s long-term supply and services contract backlog to $4.1 billion with earnings visibility over 10 to 15 years.

In the real estate segment, the Keppel Education Asset Fund expanded its footprint into Australia with the acquisition of two assets in Sydney for approximately A$198 million (S$172 million).

Keppel’s private funds acquired Citibank Centre Korea and the Bank of Korea’s Sogong Annex Facility in Seoul.

The group has announced the monetisation of around $865 million of assets so far during the financial year, including the $323 million dividend in specie of Keppel Real Estate Investment Trust (Reit) units, which was approved by Keppel Corp shareholders on Wednesday.

This raised Keppel’s total monetisation to $5.3 billion, outperforming the $3 billion to $5 billion three-year target set in October 2020.

The company is now working towards its next target – achieving a cumulative $10 billion to $12 billion in asset monetisation by the end of 2026.  

Chief executive Loh Chin Hua told a briefing on Thursday that the company remained focused on executing its strategy of transforming itself into a global asset manager and operator. “Since the launch of our business transformation plan in May, the company has made significant progress on various fronts,” he added.

Keppel’s net gearing increased slightly to 0.89 times as at Sept 30 from 0.86 times as at June 30, mainly due to the payment of interim dividends.

The company said it continued to strengthen its resilience amid high interest rates. About 60 per cent of its borrowings were on fixed rates as at Sept 30, with an average interest cost of 3.71 per cent and a weighted tenor of about three years.

The company recorded increased activity across fund management and investment platforms during the nine months, raising around $1 billion in equity and making acquisitions of $600 million in the third quarter. This brought total acquisitions to $1.7 billion for the first nine months.

Keppel also reported increased fund activity across all three business segments over the past few months, and achieved its first closing of US$575 million (S$790 million) for its flagship core infrastructure fund with a target size of US$2.5 billion.

Mr Loh said the company was gaining good traction in fund raising for its flagship sustainable urban renewal fund, and was working towards its first closing soon.

It secured initial equity commitments of 1.6 billion yuan (S$306 million) for its China-focused sustainable urban renewal programme, which can potentially have assets under management of about 3.9 billion yuan when fully leveraged and invested.

Mr Loh said Keppel had adopted a refreshed China strategy that will involve the company pivoting from traditional residential property development to focus on sustainability-related solutions in sectors benefiting from tailwinds and government support, and where it has strong differentiation and value-add.

“China has changed, and the real estate sector is under stress,” he noted. “But over the longer term, we still see good opportunities in China, particularly in areas such as energy transition, data centres and others. We are adopting a China-for-China strategy.”

Keppel also strengthened its presence in private credit, acquiring the remaining 50 per cent interest in Pierfront Capital Fund Management, which offers bespoke private credit financing solutions in real asset sectors.

The company expects its fund management and investment momentum to increase, with more than five new funds in the process of fund raising and being planned for launch in the next two years, and a deal flow pipeline of more than $13 billion.

Keppel is planning for dividend distributions this year to reach around $2.70 per share, including dividend in specie of Keppel Reit units worth around 18 cents per share.

Two months ago, it unveiled a record first-half net profit of around $3.6 billion, a sevenfold leap from $498 million recorded in the same period in 2022.

The bumper figure included a one-off disposal gain of $3.3 billion from the divestment of Keppel Offshore & Marine, which Keppel sold earlier in 2023 for $4.5 billion to Sembcorp Marine, now called Seatrium.

Removing this one-off gain, net profit on a continuing operations basis rose 2.5 per cent to $445 million, from $434 million in 2022.

Keppel also announced on Thursday evening that its deputy chief financial officer (CFO) Kevin Chng, 51, will be appointed CFO with effect from Jan 1, 2024. He will succeed Mr Chan Hon Chew, who will retire on Dec 31 after close to 10 years in the role.
 
Mr Chng joined Keppel in 2016 and was its general manager of group risk and compliance. He was then CFO of Keppel Offshore & Marine before the unit was divested from the group. He was appointed deputy CFO of Keppel Corp in March 2023.