Keppel (BN4) H2 2023 earnings summary

Executive summary

• FY23 net profit reached a record $4,067m, including $3,182m from discontinued operations; continuing-operations profit was $996m excluding the $111m KREIT distribution-in-specie loss, up 19% YoY.

• Transformation advanced toward a global asset manager and operator model, with the O&M business divested, a horizontally integrated structure adopted and $5.4b of asset monetisations since Oct 2020.

• Recurring income rose 54% YoY to $773m and represented 88% of continuing-operations net profit, versus 60% in FY22.

Financial highlights

• FY23 revenue was $6,967m, up 5%; operating profit $1,076m, up 90%; EBITDA $1,699m, up 25%; and profit before tax $1,213m, up 11%.

• FY23 reported net profit was $4,067m versus $927m; continuing-operations net profit was $885m after the $111m distribution loss, versus $839m in FY22.

• FY23 EPS was 227.6 cents, including 178.1 cents from discontinued operations; continuing-operations EPS was 49.5 cents versus 47.2 cents.

• 2H23 revenue was $3,251m versus $3,264m; operating profit rose to $504m from $210m, and net profit from continuing operations was $440m versus $405m.

Outlook and guidance

• FUM target is $200b by 2030; pro forma FUM was $79b at end-2023, including assumed completion of the first 50% Aermont Capital stake acquisition.

• Aermont’s FUM has potential to grow by up to 2.5x; fundraising and dealmaking activity is expected to increase in 2024 as inflation eases and interest rates stabilise.

• Overseas home sales of 5,150 units valued at ~$1.7b are expected to be recognised in 2024–2025.

• A multi-year GlobalFoundries power purchase agreement will supply 150–180 MW annually from May 2024; the Keppel Sakra Cogen Plant was 35% complete at end-Dec 2023.