Keppel Corporation Limited

Keppel reported first-half 2026 net profit of SGD 155 million, down 59% from SGD 378 million a year earlier, as SGD 375 million of noncore portfolio losses offset underlying performance. Excluding the noncore portfolio, new Keppel net profit was SGD 530 million, up 25% year-on-year from SGD 424 million; recurring income was SGD 467 million, up 13% from SGD 414 million. Annualized ROE was 3.6% on a reported basis versus 7.2% a year ago, while the new Keppel ROE was 15% versus 14.7%. Net debt to EBITDA was 6.7x reported versus 5.8x at end-2025, and 1.4x for new Keppel; free cash flow was an inflow of SGD 570 million versus an outflow of SGD 48 million last year, while new Keppel free cash inflow was SGD 244 million versus an outflow of SGD 179 million. Forward-looking, management said FUM reached SGD 106 billion in July, asset monetization was about SGD 1.7 billion year-to-date, and full-year monetization target remains SGD 2 billion to SGD 3 billion. The board declared an interim dividend of SGD 0.15 per share, unchanged from a year ago.

CEO Loh Chin Hua framed the quarter as evidence that Keppel is becoming a global asset manager and operator, not just a conglomerate. He highlighted rising demand for sustainable digital and energy infrastructure, the acceleration of AI-related demand, and Keppel’s integrated ecosystem as the key strategic advantage. He was upbeat on progress toward the two main priorities: growing FUM and monetizing noncore assets, while stressing that new Keppel’s recurring income, cash flow and operating capabilities are strengthening.

CFO Kevin Chng emphasized the gap between reported profit and underlying performance, pointing to SGD 375 million of noncore losses that drove reported first-half net profit down to SGD 155 million. He said the noncore losses included SGD 278 million from legacy offshore & marine assets, including a SGD 165 million impairment on 13 legacy rig assets, and also noted that net debt to EBITDA rose to 6.7x reported but stayed at 1.4x for new Keppel. He highlighted strong cash generation, with free cash inflow of SGD 570 million, and said new Keppel recurring income rose to SGD 467 million, with SSCI profit at SGD 178 million and infrastructure profit at SGD 538 million. He also said the rig monetization program should deconsolidate six rigs once completed, reducing associated interest cost, while performance fees remain a smaller share of total fees than base fees.

Analysts focused on the power business, asking about spark spreads, LNG sourcing, reserve margins, and whether Sakra Cogen was fully contracted; management said Sakra is fully committed for 2026 and 2027 aside from reserve margin, and that no elevated replacement gas costs had been crystallized for the second half. Questions also centered on the SGD 13.5 billion fundraising, where management said roughly 45% came from Aermont Fund VI and about SGD 3.3 billion from a sovereign wealth fund allocation, with fees earned on committed capital. On the rig impairment and monetization, management said the accounting losses reflect value-in-use assumptions and that the special dividend will be based only on cash actually realized, not non-cash components. Analysts also asked about M1’s turnaround, and management said a 3-year plan targets SGD 70 million of annual run-rate cost savings by 2028, with about SGD 10 million expected by end-2026.