Keppel Corp unveils 10-year roadmap with focus on four key segments

Keppel's blueprint is being launched amid Temasek Holdings' pre-conditional partial offer to gain control of the firm. PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - Keppel Corp has unveiled a 10-year roadmap that sharpens its focus on four key segments and on growing the units as an integrated business, with an eye on mergers and acquisitions and divestments of selected assets.

Under Vision 2030, which was a year in the making and was completed last month, the diversified firm has redefined its various businesses into four areas - energy and environment, urban development, connectivity and asset management.

Keppel, one of the world's largest oil-rig makers, also wants to pivot away from lumpy project-based earnings towards recurring income, in hopes of being rewarded with a market re-rating. It also aims to crank up its efforts to meet a 15-per-cent return on equity (ROE) target.

Keppel chief executive Loh Chin Hua told The Business Times: "This plan is a big step up (from Vision 2020 adopted in 2014). The Keppel of 2014 is very different from the Keppel of 2020. Much water has gone under bridge. My colleagues are bolder now.

"We started out as a conglomerate, with disparate businesses unified by name and a common heritage; we are becoming one that is clearly an integrated business. We are breaking down the silos to work more synergistically."

To build a "connected value chain" and capture "new profit pools", Keppel's individual business units will tap the synergies across the group that may not have been available to them earlier, such as floating data centre parks and large-scale urban developments.

Keppel will zero in on renewables, environmental solutions, near-shore floating infrastructure, connectivity solutions including green data centres and smart-district development; in short, it wants to become a "powerhouse of solutions for sustainable urbanisation".

It will also activate its sizeable landbanks in China and Vietnam to recycle capital and improve returns. Sustainability will continue to remain a centrepiece of the company's strategy, said Mr Loh at an analyst briefing held on Thursday to announce Vision 2030.

Keppel Capital, the group's asset-management arm, will be an "important twin" to help fund the solutions created by the group, said Mr Loh.

Keppel's blueprint is being launched amid Temasek Holdings' pre-conditional partial offer to gain control of the firm. In all likelihood, the S$4 billion deal appears to be on track - the offer's long stop date is Oct 21. After that, Temasek plans to launch a comprehensive strategic review of Keppel's businesses; it has said it intends to work with Keppel's board on the review.

Mr Loh said: "A large part of this process (Vision 2030) had already taken place well before the pre-conditional offer in October. We have to plan for the long term and have a vision that can serve as a rallying point for Keppelites ... particularly at this point of time, when there is a lot of uncertainty.

"It's not all about profits, but also about how we can be a part of creating greener urban spaces. This vision transcends Covid-19 and any short-term events for the group. We believe it will resonate with all parties," he said in response to a question on the plan's timing, coming merely months ahead of Singapore's state investment firm potentially taking control of the company, to be followed suit by the review.

Keppel's multi-year plan to lead its transformation over the long term with interim targets for 2025 follows a six-year plan laid out in 2014 - the year Mr Loh took over the reins as Keppel's chief. The multi-year plan is being launched against the backdrop of an oil price slump and the novel coronovirus pandemic.

"Our belief is that Covid-19 will not change some of the trends that have already started. If anything, many trends such as digitalisation and climate change will accelerate," he said.

Around 30 young Keppel leaders across its business units contributed their ideas that took into account emerging trends and Keppel's capabilities in the making of Vision 2030.

Keppel's shares fell 6 cents or nearly 1 per cent to finish the day at $5.97.

Join ST's Telegram channel and get the latest breaking news delivered to you.