• Little financial details were revealed in this update. Revenue was S$1.5bn in 1Q24, down from S$1.6bn in 1Q23. Net profit was higher YoY if the impact of the disposed offshore and marine assets were excluded. The real estate segment underperformed.
• The pace of asset monetisation slowed in this quarter. Only S$169.9mn (FY23: S$947.4mn) was achieved, which includes the divestment of the Wuxi landbank for S$161mn.
• Net gearing hovered at 0.9x (Dec 23: 0.9x), suggesting muted operating cash inflow while capex is kept low. With its asset-light strategy, investments are made through funds under management and not through its balance sheet.
• Maintain ACCUMULATE and SOTP-derived TP at S$7.98. A near-term share price catalyst could be a potential redemption of the notes receivables.

Highlights

The Negatives

The pace of asset monetization was slow. S$169.9mn was unlocked (FY23: S$947.4mn), which included the proposed divestment of a residential landbank in Wuxi for S$161.6mn. The total value unlocked from the monetisation programme since 2020 is S$5.5bn. It maintains the monetisation target of 10-12bn by 2026.

– Net gearing hovered at 0.9x at end-Mar 24 (Dec 23: 0.9x), suggesting slow cash inflow. The average cost of debt was 3.81% (FY23: 3.75%). About S$2.4bn (22% of total debt) is due this year and S$400mn 2.9% perpetual securities are due for reset/refinance in Sep 24. Management expects cost of debt to be maintained at 3.81% when these are refinanced.

The Positives

+ It received S$71.3mn from Asset Co, which holds the legacy rig assets. The rigs are fully deployed on bareboat charters, buoyed by stronger offshore and marine activities. We believe these rigs could be monetized in the near term, which could return S$3.1bn cash to Keppel when the notes receivables from Asset Co are redeemed.

+ Fees from asset management grew 52% to S$88mn (FY23: S$283mn). About 90% of this is recurring. About S$436mn in equity was raised YTD (FY23: S$5bn). It has 19 active private funds currently and plans to launch three new funds for data centres, education assets and private credit in 2024.