Keppel Corporation Limited (SGX: BN4) is on a roll.
The asset manager’s shares have climbed 17.2% since it divested its offshore and marine (O&M) division to Seatrium Limited (SGX: S51), formerly known as Sembcorp Marine.
Keppel has also reported increased activity across its fund management and investment platforms.
The blue-chip group recently reported its 2023 third quarter (3Q 2023) and nine-month (9M 2023) business update.
Here are five highlights from Keppel’s update.
1. A robust performance for 9M 2023
For 9M 2023, Keppel saw group revenue rise 5.1% year on year to S$5.3 billion.
Two out of three divisions reported higher year-on-year revenue.
The Infrastructure division, which made up two-thirds of group revenue, reported an 11.2% year-on-year improvement in revenue to S$3.6 billion.
Connectivity division’s revenue climbed 8.3% year on year to S$1.1 billion but the Real Estate division’s revenue fell by 22.2% year on year to S$650 million.
Keppel also announced that both 3Q 2023 and 9M 2023 net profit grew year-on-year, although no numbers were disclosed.
2. Scaling up its funds under management
The group continues to scale up its funds under management (FUM).
FUM came in at S$53 billion as of 30 June 2023, doubling from its 2016 level of S$25 billion.
Keppel’s goal is to grow FUM to its interim target of S$100 billion by 2026 and then to S$200 billion by 2030, as communicated during its recent Investor Day.
From 2016 to 2022, Keppel saw its asset management fees double from S$128 million to S$267 million, with 9M 2023’s fees coming in at S$178 million.
All three divisions saw healthy business developments in securing investor commitment.
The Keppel Core Infrastructure Fund achieved its first close of US$575 million out of a target size of US$2.5 billion.
For Real Estate, the group’s Keppel Education Asset Fund acquired two assets in Sydney and the division is working towards the first close for its Keppel Sustainable Urban Renewal (SUR) Fund.
On the Connectivity side, Keppel has secured private investors to invest in the group’s share of the Bifrost Cable System.
Looking ahead, Keppel expects this momentum to continue with more than five new funds in the process of fundraising with plans for launch within the next two years.
The group’s deal flow pipeline stood healthy at more than S$13 billion.
3. Exceeded its asset monetisation target
Keppel announced around S$865 million of asset monetisation for 9M 2023.
This amount includes the dividend-in-specie (DIS) of one unit in Keppel REIT (SGX: K71U) for every five units of Keppel shares held that was announced during the latter’s first-half results.
It also includes S$94 million received from the divestment of a 35% stake in V City in China.
Since the commencement of the asset monetisation programme in October 2020, the asset manager has monetised close to S$5.3 billion of assets, which has exceeded the upper bound of its asset monetisation target of between S$3 billion to S$5 billion by the end of this year.
Keppel’s eventual goal is to achieve a cumulative asset monetisation target of S$17.5 billion.
4. Pursuing renewables and urban solution projects
Meanwhile, Keppel continues to expand its portfolio of projects with a focus on renewables, low-carbon solutions, and urban solutions.
With the divestment of its O&M division, its energy portfolio now comprises around 3 GW of renewables and 1.9 GW of gas.
The group is also the first in Singapore to import renewable energy with more than 260 GW imported to date.
Over at its Real Estate division, management stresses being asset-light.
The division implemented SUR initiatives across eight projects with a combined asset value of S$7.2 billion.
Elsewhere, an assisted living facility is slated to open in Nanjing, China, in 4Q 2023.
Keppel will leverage its platform capabilities, announced during its major reorganisation, to offer senior living management services to third-party investors in Asia.
5. Paying out significant total distributions for 2023
Investors may be surprised to learn that Keppel has paid out a total of almost S$2.70 in both dividends and distributions this year.
Back in March, Keppel shareholders would have received the equivalent of S$2.19 per share when the group announced the DIS of Seatrium shares.
The recent Keppel REIT DIS is worth around S$0.18 per share.
In addition, Keppel has also paid out a total of S$0.33 per share in cash dividends comprising 2022’s final dividend of S$0.18 and 2023’s interim dividend of S$0.15.
With more asset monetisation coming up along with the asset manager ramping up its FUM, investors may be in for more positive surprises.
We’ve just released a new Special FREE Report: “How to Make Your Child a Millionaire.” It’s a simple, no-nonsense guide for parents who care for their child’s financial future. You’ll also find 3 stocks (one even had a 55.8% jump in dividends) you can consider today to kickstart your child’s “piggy bank.” Click HERE to download now.
Disclosure: Royston Yang does not own shares in any of the companies mentioned.