AS KEPPEL : BN4 -0.4% shifts its focus towards becoming an asset manager, chief executive Loh Chin Hua said the group is exploring opportunities in private equity markets and infrastructure.

 

The move is part of its ongoing efforts to develop steady streams of recurring income.

 

By expanding both its recurring income and margins, Keppel will get &ldquo much closer&rdquo to its return-on-equity target of 15 per cent on a sustainable basis, said Loh in Keppel&rsquo s FY2023 annual report.

 

&ldquo This is a target that we are confident of achieving well before 2030,&rdquo he continued. 

 

Loh acknowledged that private equity markets have experienced some headwinds in the past few years from fears of recession and elevated interest rates. 

 

However, he said the easing of inflation and stabilisation of interest rates mean that market liquidity should gradually improve in the later part of this year, which could signal more opportunities for fundraising and dealmaking.

 

Despite improvements in market conditions, limited partners (LPs) are expected to remain highly selective of investment strategies and asset classes, with a preference for sectors underpinned by resilient macrotrends, such as the energy transition, climate action and digitalisation. These trends, Loh said, are driving demand for Keppel&rsquo s solutions. 

 

He is also especially optimistic about the infrastructure sector, noting that infrastructure is expected to be one of the fastest-growing asset classes over the next few years.

 

&ldquo A significant amount of capital will be required not only to replace ageing infrastructure but also to provide more advanced solutions needed for sustainable development,&rdquo he said. 

 

As at end-2023, Keppel&rsquo s growing base of infrastructure-related supply and service contracts stacked up to S$4.3 billion, with revenues to be earned over the next 10 to 15 years.

 

In FY2023, the group&rsquo s recurring income rose 54 per cent year on year to S$773 million, mainly led by improved contributions from its infrastructure segment. According to Loh, Keppel has become more asset-light and shifted away from lumpy engineering, procurement and construction profits towards steadier trading and fee-based income.

 

&ldquo We are excited by the many opportunities in the infrastructure space. We are confident of not just sustaining our performance but also growing both profits and returns from this segment through our asset-light model,&rdquo he added. 

 

In 2023, the company divested its offshore and marine business and delivered a record high full-year net profit figure in its 55-year history. 

 

&ldquo Our earnings, now much more recurring, should attract growth multiples, rather than being valued based on price to book and discount to revalued net asset value with a further holding company discount,&rdquo Loh said.

 

He added that 80 per cent of analysts who cover Keppel no longer apply a conglomerate discount to the counter. 

 

Despite the notable progress, Keppel is still looking to drive capital-efficient growth. As at end-2023, the group announced the monetisation of S$5.4 billion out of a S$17.5 billion pool of monetisable assets on its balance sheet.

 

As at end-2023, Keppel also had total assets of S$26.8 billion on its balance sheet, a decrease of about 17 per cent from end-2021. Over the same period, the group&rsquo s funds under management (FUM) rose more than 30 per cent to about S$55 billion from S$42 billion at end-2021.

 

Loh said that the group will liberate a further S$6.3 billion from its balance sheet when it finishes the monetisation of its vendor notes and landbank, and this will allow Keppel to hit its cumulative monetisation target of S$10 billion to S$12 billion. 

 

In terms of mergers and acquisitions (M& A), Loh said that Keppel is looking out not just for good assets, but also top talent and strong capabilities that can add value to the group and bolster its value proposition to its global LPs.

 

He said Keppel cannot rely solely on M& A deals to hit its S$200 billion FUM target, and will have to look at inorganic growth opportunities too. 

 

Looking ahead, Loh said that Keppel will continue to streamline itself as a company to become fitter and more agile. 

 

&ldquo We will further invest in our human capital, developing our people to remain relevant in a changing landscape, while bolstering the company&rsquo s capabilities in areas such as asset management and digitalisation. We will fully leverage technology, including artificial intelligence, to do our jobs better and faster.&rdquo

KEPPEL : BN4 -0.14% posted a 2.5 per cent rise in net profit to S$439.9 million for the second half ended December, bringing full-year earnings to S$4.1 billion &ndash a more than four times increase from a year earlier.

 

The full-year earnings &ndash a record in the conglomerate-turned-global asset manager and operator&rsquo s 55-year history &ndash was in big part led by gains from the major sale of Keppel Offshore & Marine (KOM) to Seatrium : S51 0%.

 

&ldquo For this (current) year, obviously I don&rsquo t have another KOM to sell,&rdquo quipped Keppel chief executive Loh Chin Hua, adding however that the group&rsquo s continuing operations fared &ldquo very well&rdquo in FY2023.

 

Net profit from continuing operations was up nearly 9 per cent to S$440 million for the second half. For the full year, that figure rose nearly 6 per cent to S$885 million. This included the accounting loss of S$111 million from the distribution of Keppel Reit units (distribution loss or DIS loss) to shareholders last November.

 

&ldquo If you take out the DIS loss, last year&rsquo s numbers were also...more than decent...quite good,&rdquo he said at a results briefing on Thursday (Feb 1).

 

The results translate to earnings per share (EPS) of S$0.246, up from S$0.242 in H2 FY2022.

 

Revenue from continuing operations for H2 was nearly flat at S$3.3 billion, down 0.4 per cent from a year earlier. For the full year, revenue rose 5.2 per cent to nearly S$7 billion.

 

All three business segments were profitable. Keppel&rsquo s infrastructure and connectivity segments recorded revenue gains, while its real estate segment declined due to lower contributions from its China and Singapore property trading projects.

 

The infrastructure business was the brightest spot with full-year net profit more than doubling to S$699 million. This was driven by higher net generation and margins from the integrated power business, as well as special distribution from Keppel Infrastructure Trust.

 

Net profit in the connectivity segment rose 30 per cent to S$127 million, owing to improving earnings contribution from M1 and gains from capital recycling.

 

On the other hand, net profit of the real estate segment fell 8 per cent to S$426 million. The company cited the dip to lower fair value gains from investment properties and contribution from property trading projects in China, as well as higher net-interest expense.

 

The asset manager has proposed a final dividend of S$0.19 per share for FY2023, up from S$0.18 per share in FY2022. This brings the total cash dividend for FY2023 to S$0.34 per share, which includes a S$0.15 interim dividend paid in August 2023.

 

The total cash dividend translates to a yield of 4.7 per cent, based on Keppel&rsquo s Jan 31 closing price. The group plans to pay the dividend on May 8, after the books closure date on Apr 26.

 

Last May, Keppel shed its long-held conglomerate status and recast itself as a global asset manager and operator. This had also followed the sale of its O& M business by the company that used to be known as one of the world&rsquo s largest rig builders.

 

Since then too, it has shifted away from lumpy earnings &ndash this was largely related to the O& M orderbook and property trading businesses &ndash to growing recurring income.

 

This it has done markedly well. Last year, recurring income from continuing operations jumped 54 per cent to S$773 million from a year ago, making up 88 per cent of its net profit versus 60 per cent in FY22.

 

The infrastructure segment that houses Keppel&rsquo s sizeable power and renewables business was a big contributor to the shift. As at end-2023, about 60 per cent of the company&rsquo s generation capacity was contracted for three years and more.

 

&ldquo So, the lumpiness and the tough cliff in a feast or famine earnings profile is behind us,&rdquo remarked Cindy Lim, CEO of Keppel&rsquo s infrastructure division.

 

KEPPEL Land and its subsidiary Double Peak Holdings are divesting their 100 per cent stake in Greenfield Development, for US$57.4 million in cash.

 

Greenfield Development wholly owns Straits Greenfield, which has the right to build and operate a hotel in Myanmar.

 

The consideration of US$57.4 million exceeds Greenfield Development&rsquo s net asset value of US$43.9 million as at end-February 2023, said Keppel Corporation : BN4 +1.1% (Keppel Corp) on Monday (Mar 6).

 

The group added that its property arm&rsquo s divestment is in line with Keppel Corp&rsquo s asset monetisation plans to unlock capital, which can be channelled towards new growth opportunities.

 

The divestment is expected to be completed by H1 of 2023, after which both Greenfield Development and Straits Greenfield will no longer be subsidiaries of Keppel Corp.

 

It is not expected to have a material impact on Keppel Corp&rsquo s net tangible assets per share, nor earnings per share, for the current financial year.

KEPPEL Corporation said on Wednesday (Feb 8) that a unit of Keppel Land is selling its 100 per cent stake in Willowville for US$5.5 million.

 

Willowville has a 60 per cent stake in a project company that holds the rights to develop a site in District 1 in Ho Chi Minh City, Vietnam.

 

Oasis Asia Real Estate Investment, the purchaser, will make the payment to Keppel Land Vietnam Properties, a wholly-owned subsidiary, in two tranches, Keppel said in an exchange filing.

 

The sale is expected to take place in the first half of 2023.

 

Keppel added that the divestment is in line with its Vision 2030 asset monetisation plans to unlock capital.

ORIZONA, a wholly-owned unit of Keppel Land, has terminated a joint venture announced in 2020 with Emerald Haven Realty to develop a residential project in Chennai in south-eastern India.

 

In a Thursday (Jun 30) bourse filing, Keppel Corp said that Orizona, Emerald Haven and other entities involved have entered a deal to terminate the share-purchase agreement in relation to the acquisition of sale shares, and the joint-venture agreement in relation to the subscription and allocation of compulsorily convertible debentures (CCDs).

 

Orizona had not made any payment for the acquisition under the share-purchase agreement or for the subscription and allocation of CCDs under the joint-venture agreement. With the termination, the parties have no further liability to each other from Thursday.

 

There will not be any material impact on the earnings per share and net tangible asset per share of Keppel for the current financial year.

A CONSORTIUM of Keppel Land' s unit Keppel Land Vietnam Properties, Keppel Vietnam Fund (KVF) and a co-investor of KVF is planning to acquire a 49 per cent interest in 3 residential land plots in Hanoi for an aggregate consideration of 2,715 billion dong (S$159.7 million).

 

The consortium has entered into a binding heads of agreement with real estate company Phu Long Real Estates Joint Stock Company, a subsidiary An Khanh New City Development Joint Venture Company for the acquisition, Keppel Corp Keppel Corp: BN4 +1.32% announced in a press statement on Saturday (Jan 22).

 

The 3 sites totalling 14.2 ha comprise 2 land plots zoned for landed housing development and 1 land plot for a high-rise condominium. The necessary development approvals, including the masterplan and land use right certificates for the 3 sites, have been obtained, Keppel noted.

 

The transaction is expected to be completed by the third quarter this year. Following that, the consortium and Phu Long plan to jointly develop a total of about 1,260 homes, comprising 1,020 condominium apartments and about 240 landed homes. The total development cost for the project, including land cost, is expected to be over 11,500 billion dong (S$680 million).

 

Joseph Low, president (Vietnam) of Keppel Land, said there is a strong demand for " thoughtfully designed and high-quality homes" among discerning homebuyers in Hanoi.

 

" In line with Keppel' s asset-light business model under Vision 2030, Keppel Land Vietnam is investing in this project alongside KVF and its co-investor, allowing us to tap third party funds for growth through collaborating with Keppel Capital," said Low.

 

The project is part of the nearly 300 ha Mailand Hanoi City, which will potentially be developed into a modern township with multi-functional areas comprising landed developments, high-rise condominiums, mixed-use complexes, schools, hospitals and green spaces.

 

As part of the agreement, Keppel Land has the rights of first offer for the development of the township' s subsequent phases.

 

Phung Chu Cuong, general director of Phu Long, said: " As a leading, reputable real estate company in Vietnam, Phu Long invests and develops large-scale projects in strategic cities and popular tourist attractions such as Ho Chi Minh City, Hanoi, Da Nang, and Nha Trang. We are honoured to once again partner a regional powerhouse, Keppel Land, in developing creative and safe urban areas, while preserving cultural heritage, applying technology, and protecting the environment."

 

Keppel Land has had a presence in Vietnam since the early 1990s. Apart from projects such as Saigon Centre in Ho Chi Minh City, Keppel Land also developed the International Centre, Sedona Suites Hanoi and Vietcombank Office Tower in Hanoi.

 

It has also partnered with Phu Long since 2019 to successfully develop four residential developments in Saigon South, Ho Chi Minh City.

 

This transaction is not expected to have any material impact on the earnings per share and net tangible asset per share of Keppel Corporation for the financial year ended Dec 31, 2021 and the current financial year.

KEPPEL Land, the property arm of Keppel Corp Keppel Corp: BN4 0% , has set a net-zero carbon commitment, with an aim to reach this by 2030.

 

In a press statement on Tuesday (Dec 14), Keppel Land said that it will cut emissions that come directly from the company' s operations (Scope 1) and emissions from power supplied to the company (Scope 2) by 100 per cent in 2030, with 2020 being the base year.

 

Emissions associated with the company' s supply chain, or Scope 3 emissions, will be trimmed by 20 per cent per square metre by 2030.

 

This move is in line with Keppel' s Vision 2030 to place sustainability at the core of its strategy, said Louis Lim, chief executive of Keppel Land.

 

" Keppel Land is doing its part to combat climate change through improving resource efficiency and reducing any negative impact on the environment," he added.

 

These greenhouse gas emissions reduction targets have been approved by the Science Based Targets initiative. The Scope 1 and 2 emission targets are consistent with the reductions required to limit global warming to 1.5 degrees Celsius.

 

This will make Keppel Land the first in Asia' s real estate sector to set a near-term 100 per cent reduction science-based target for Scope 1 and 2 emissions in line with the 1.5 degrees Celsius trajectory, according to its press statement.

 

To meet these emissions reduction targets, the company will undertake various measures, including phasing out the use of diesel equipment, achieving high Green Mark standards or their equivalent, for all its new commercial developments.

 

It will also improve the energy efficiency of its portfolio of existing buildings through energy optimisation and digitalisation strategies maximising on-site renewable energy purchasing renewable energy certificates, and increasing the use of green-labelled and low-emission materials and products.

 

Keppel Land already has a wide range of initiatives in place.

 

It has, for instance, adopted 6 of the UN Sustainable Development Goals that are most aligned with its business and material issues.

 

Keppel Land has also voluntarily disclosed its approach in the 4 key areas of governance, strategy, risk management, as well as metrics and targets, as recommended by the Task Force on Climate-related Financial Disclosures.

 

In the evaluation of major new investment decisions, Keppel Land implemented a shadow carbon pricing policy to mitigate climate-related risks and support low-carbon investments.

 

Keppel Land has also strengthened its green funding sources. Earlier this year, it secured its maiden 5-year S$150 million sustainability-linked loan from DBS.

PROPERTY developer Keppel Land aims to more than double its revenue share from the South-east Asian market (excluding Singapore) in the medium term, with plans to ramp up its Vietnam footprint and overhaul its approach to the Indonesian market.

 

Speaking to The Business Times, Keppel Land chief executive Louis Lim said that the envisioned regional expansion is very much part of blue-chip parent Keppel Corp' s Vision 2030 strategic transformation road map: " It is about really accelerating what we' re doing across markets and diversifying, for us, out of a China-led business. I think we want to make sure that we have legs in more geographies, without being too diversified."

 

At the same time, Keppel Land is honing its business strategy in each local approach to emphasise recurring income, in a move away from land-banking and home sales alone.

 

Ideal revenue contribution from the Asean region would be 15 per cent now, rising to 30 per cent in five years, said Mr Lim. Keppel Land last reported net profit of S$368.1 million for the 12 months to Dec 31, 2020, on revenue of S$1.28 billion.

 

Vietnam is the third-largest market for the company, after China and Singapore, with Mr Lim saying that these three countries " each contribute a sizeable portion of our profits" .

 

Despite the economic fallout of the Covid-19 pandemic, Keppel Land wants to continue to ride on the market potential of Vietnam' s urbanising population, he said, singling out the country as " a bright star within the region" . While Keppel Land' s presence is concentrated in Ho Chi Minh City, he has plans to return to Hanoi - where he sees demand for landed homes.

 

The company also wants to scale up in India and Indonesia, Mr Lim added. " We believe that there is inherent value in Indonesia and so that' s an area we are focused on as well."

 

As Keppel Land grows in South-east Asia, Mr Lim stressed that the company is looking not only for development and trading opportunities, but also for new engines of growth.

 

He named senior living facilities, management services for sustainable offices, and digital services for smart cities as some types of projects that could support recurring revenue.

 

An expansion of such activities would mark a sea change for Keppel Land. Turnover from the property trading segment - which develops residential properties - is more than 10 times the size of the commercial properties, hotels and serviced apartments investment arm. The property trading unit posted S$1.18 billion in sales in 2020 against S$86.8 million for property investment.

 

In the Asean region, Mr Lim said, Keppel is " targeting projects with shorter gestation periods, because I think that will really improve the returns that we have for our shareholders and our ability to recycle our assets faster" .

 

Keppel Land has been playing in its regional backyard for decades. The company has been active in Indonesia since 1989, and in Vietnam since 1991. Other assets in its Asean portfolio include a hotel in Myanmar, as well as commercial properties in Myanmar and the Philippines.

 

Stressing that " real estate is a very local business" , he noted that the company " essentially paid a lot of tuition fees, and we gained a lot of learning scars" over the years in Vietnam.

 

The same could be said of Keppel Land' s involvement in other parts of the Asean region, where the management appears to have re-thought its approach to property investments.

 

In the last decade, Keppel Land' s overseas disposals include Sedona-brand hotels in Manado in Indonesia and Mandalay in Myanmar. It also let go of land in Surabaya' s central business district, and a West Bali site originally meant for a luxury resort.

 

When asked about the rationale for divestments like these, Mr Lim said that " it goes back to a fundamental shift in the Keppel Group' s strategy, where we' re moving away from asset-heavy businesses to an asset-light approach - where we' re also moving away from land-banking" .

 

In line with the shift, he signalled that Keppel Land has also become more selective about its businesses in each regional market, since " we want to make sure we don' t play in segments where we might risk a glut on the supply side" .

 

For example, " when we look at China and Vietnam, we see . . . that we can do well not just in residential, but in commercial, retail, as key segments to focus on" , Mr Lim said, citing the developer' s track record and experience in these countries, as well as ongoing market opportunities.

 

On the other hand, he identified an over-supply of commercial space in Indonesia, as well as a relative lack of buyer appetite for high-rise residential developments. As such, the company' s focus in Indonesia is on the landed residential business and more of the large-scale precinct township-like type of projects, he said.

 

" The likelihood is we won' t do it alone," he added of the regional scale-up. " As we build our business in South-east Asia, we will always be looking at the right partner for us to work with."

 

KEPPEL Land, the property arm of Keppel Corporation, has taken a minority stake in co-living platform Cove, as the lead investor in the startup' s US$4.6 million Series A funding round.

 

The size of the stake was not disclosed in Keppel Land' s statement on Tuesday. Keppel Land CEO Tan Swee Yiow said that co-living solutions can be " incorporated in our development projects, potentially augmenting their value, and be developed into scalable and sustainable recurring income streams" .

 

He also noted that Cove has a complementary expansion strategy into markets in South-east Asia where Keppel Land is already present.

 

Headquartered in Singapore, Cove was founded in 2018 through startup generator Antler. It currently has about 300 bedrooms and studios in Singapore, and about 250 in its new market of Jakarta.

 

According to the statement, Cove expects to double its offering to around 1,000 rooms by the first half of 2021.

 

Last September, Cove announced that it had secured more than US$2 million in seed funding to expand in South-east Asia and build-out its technology.

 

The round was led by investment firms from Asia and Europe - Indonesia' s Venturra Singapore' s Investigate and Yuj Ventures, which is backed by The Xander Group and Germany' s Picus Capital. The lead investors were joined by Singapore venture capital funds Aetius Capital and Found Ventures, as well as various strategic angel investors.

 

KEPPEL Corp' s property arm, Keppel Land, is divesting its remaining 30 per cent interest in Dong Nai Waterfront City (DNWC) for about 1.95 trillion dong (S$115.9 million) in cash.

 

The transaction follows the divestment of Keppel Land' s 70 per cent stake in DNWC to Nam Long Investment Corporation (NLG), which was announced in 2019.

 

DNWC has the right to develop a 170-hectare township in Dong Nai Province, Vietnam, Keppel Corp said in a press statement on Tuesday.

 

The buyer is NLG, which will pay the consideration in two tranches upon completion of the deal.

 

With the divestment of this remaining 30 per cent interest, Keppel Land expects to recognise a gain on disposal of about S$52.5 million.

 

The deal is expected to be completed in the first half of 2021, subject to certain conditions being fulfilled, including the issuance of a new enterprise registration certificate by the relevant Vietnamese authorities, Keppel Corp noted.

 

Said Joseph Low, general director of Keppel Land (Vietnam): " The divestment of Dong Nai Waterfront City is in line with Keppel' s plan to monetise identified assets and apply the balance sheet space that is released for new growth opportunities under its Vision 2030."

 

He added that Keppel Land will continue to expand its presence in Vietnam which is a key market, and contribute to the country' s sustainable urbanisation.

 

Based on Keppel Corp' s latest audited financial statements, had the divestment been completed on Dec 31, 2019, the net tangible assets per share as at end December would have increased to S$5.28 from S$5.25.

 

Keppel Land China announced on Nov 10 that it has divested 100% of the equity interest in Chengdu Hilltop Development Co Ltd (CHD) to Chengdu Longfor Development Co for a consideration RMB1,260 million ($250.4 million).

 

The divestment was made by Keppel Land China&rsquo s subsidiary Hillwest Pte Ltd.

Some RMB845.2 million will be paid as consideration for the divestment while the remaining RMB414.8 million is for repayment of loans that CHD owes to a subsidiary of Hillwest.

 

The divestment, which is in line with Keppel&rsquo s Vision 2030, is expected to recognise a divestment gain of some $43 million for Keppel Land China.

The divestment is expected to be completed in the first quarter of 2021.

 

CHD was incorporated to acquire the land for the development of Hill Crest Villas in southwest Chengdu.

 

Hill Crest Villas has completed Phase 1 of the development, which comprises 53 villas and a clubhouse.

 

Following the divestment of Hill Crest Villas, Keppel Land continues to have four residential projects in Chengdu, namely Park Avenue Heights, Serenity Villas, V City and City Park.

 

Keppel Corporation says had the divestment been completed on Dec 31, 2019, the net tangible asset per share as at Dec 31, 2019 would have increased to $5.27 from $5.25.

 

Earnings per share (EPS) for FY2019 would have increased to 41.4 cents from 38.9 cents had the divestment been completed on Jan 1, 2019.