- 1H26 revenue was above expectations, but adj. PATMI was within expectations, 57%/50% of our FY26e forecasts, respectively. The higher revenue was due to inclusion of M1 in non-core revenue. Underlying 1H26 PATMI rose 16% YoY from the commercialisation of the Keppel Sakra Cogen 600MW power plant in May26. Interim DPS was unchanged at 15 cents.
- Despite the more turbulent environment, Keppel has monetised S$1.7bn of assets this year and is within the S$2-3bn target for FY26. Another milestone was S$106bn in funds under management (FUM) in Jul26, up around 16% YoY.
- We maintain our FY26e adjusted PATMI. Our SOTP-derived TP of S$13.80 and BUY recommendation are maintained. We expect 2H26 to be stronger operationally. Keppel Sakra's capacity is fully contracted, and it will boost capacity by 45% in 2H26. The jump in FUM will also begin to contribute to asset management fees. Operations and maintenance will gradually rise from the massive order book in DSS and Bifrost cable installations. Special dividends are at least S$117mn (or 6 cts) from the announced realisable divestments. Keppel plans to rationalise costs in M1 at a steeper pace before any disposal, but industry economics may be deteriorating even faster.
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