Keppel Corporation has wrapped up what CEO Loh Chin Hua calls a “pivotal year” in 2024, marking a significant milestone in its transformation from a diversified conglomerate to a global asset manager and operator. With a refined focus on infrastructure, real estate, and connectivity, Keppel has entered 2025 with a strong foundation and ambitious growth strategies, particularly in the emerging field of subsea cable systems.
Financial Performance: A Year of Stabilization and Strength
Keppel’s FY2024 net profit from continuing operations rose to $1.06 billion, a 5% year-on-year (y-o-y) increase, driven by steady contributions from its infrastructure and connectivity segments. However, total profit attributable to shareholders fell 76.9% y-o-y to $940.2 million, largely due to the absence of one-off gains from the divestment of its offshore and marine (O&M) arm in 2023 and fair value losses on Seatrium shares.
Earnings from continuing operations declined 6% y-o-y to $832 million, while legacy O&M assets posted a net loss of $124 million, attributed to fair value losses, higher financing costs, and amortization. Despite this, Keppel’s recurring income stood at $766 million, representing 72% of net profit from continuing operations, a substantial increase from 21% in 2021.
Keppel’s infrastructure segment contributed 63% of net profit, with stable recurring income, while the connectivity division added 17%, fueled by a 45% growth in earnings y-o-y.
Aggressive Asset Monetization and Expansion
Keppel continued its aggressive asset-light strategy, monetizing $1.5 billion worth of assets in 2024, a 61% increase y-o-y. This included the divestment of two Keppel DC REIT data centers for $280 million. Since 2020, Keppel has successfully divested $7 billion in assets, making significant progress towards its $10-12 billion divestment target by 2026.
The company’s funds under management (FUM) surged to $88 billion in FY2024, a 2.4x increase from $37 billion in 2020. Asset management fees climbed 25% to $436 million over the same period, reinforcing Keppel’s transition into a capital-efficient, recurring income-driven business model.
In addition, Keppel has accelerated cost-saving initiatives, achieving $70 million in recurring annual run-rate savings two years ahead of schedule, with plans to increase this to $120 million per annum by 2026.
Strategic Investments: A Renewed Push into Offshore and Connectivity
Despite an overarching asset monetization strategy, Keppel has demonstrated adaptability in revising its plans. In November 2024, the company acquired full control of Rigco Holding, which houses legacy rig assets from its offshore marine merger with Sembcorp Marine. With the offshore and marine sector recovering strongly, CEO Loh affirmed that these assets hold long-term value. Keppel plans to charter some of these rigs while exploring options for external investment and securitization as market conditions improve.
Betting Big on Subsea Cable Systems
Keppel is also capitalizing on the booming demand for digital connectivity. In January 2025, the Bifrost Cable System, a joint venture with Meta’s Edge Cable Holdings USA and PT Telekomunikasi Indonesia International, received a subsea cable landing license from the U.S. Federal Communications Commission (USFCC).
Bifrost, a 20,000km subsea cable system, is the world’s first direct connection between Singapore and North America via Indonesia, traversing the Java and Celebes Seas. Once operational, it will be the highest-capacity, high-speed transmission cable across the Pacific Ocean.
Keppel initially committed US$350 million ($472.8 million) for five of the system’s 12 fiber pairs, co-owned through a 40-60 joint venture with private investors. Bifrost is set to be ready-for-service in 2H2025, and Keppel projects an internal rate of return (IRR) of 30% per annum, though the company acknowledges this is an “exceptional” case due to early cost lock-in.
Loh also revealed that Keppel is working on two additional cable systems, each exceeding 30 fiber pairs, connecting Southeast Asia to North Asia and beyond. While discussions with partners are ongoing, the focus remains on ensuring Bifrost’s timely completion by 2H2025.
Strong Analyst Confidence and Dividend Stability
For FY2024, Keppel has proposed a final dividend of 19 cents per share, bringing total dividends for the year to 34 cents per share, consistent with FY2023. However, the total payout was significantly higher at $2.70 per share, inclusive of distributions in Seatrium and Keppel REIT shares.
Analysts remain bullish on Keppel’s long-term growth prospects. UOB Kay Hian’s Adrian Loh emphasized the scarcity value of unique assets like Bifrost, noting that the USFCC has not approved any new subsea cable systems in the past eight years. CGS International’s Lim Siew Khee and Kenneth Tan estimate that Bifrost will contribute $22 million in FY2025 and grow to $86 million in FY2026, boosting Keppel’s connectivity segment profits by 14% y-o-y to $235 million.
Looking Ahead: A Bright Future with Recurring Income and Digital Growth
Keppel’s pivot to an asset-light, high-recurring income model has effectively repositioned it as a global leader in infrastructure, real estate, and digital connectivity. With its legacy rig assets showing renewed potential, an aggressive capital recycling program, and a strong pipeline of digital infrastructure projects, Keppel is well-positioned for sustainable long-term growth.
With analysts setting target prices as high as $9.28, Keppel’s transformation story is far from over. As Loh confidently states, “We are not just de-risking; we are future-proofing Keppel for the next wave of growth.”
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