Keppel Infrastructure Trust Delivers Robust 3Q 2025 Earnings, Eyes Strategic Expansion Into Digital Infrastructure

Key Highlights from 3Q 2025 Report

• Distributable Income (DI) Surges 59%: For the nine months ended September 2025, DI rose to S\$168.9 million, up from S\$106.1 million a year ago, driven by capital recycling, acquisition gains, and improved operational performance from core assets.
• Strategic Capital Recycling Initiatives: Completed divestments of Philippine Coastal (S\$192m) and partial stake in Ventura (S\$109m), unlocking a total of S\$301m for redeployment into higher-yielding investments and future growth opportunities.
• Proposed Acquisition of Global Marine Group (GMG): KIT announced a proposed acquisition of a 46.7% interest in GMG, a leading subsea cable service provider, marking KIT’s entry into the digital infrastructure sector. This acquisition is subject to unitholder approval at an EGM scheduled for 11 November 2025, potentially signalling a transformative shift in the portfolio.
• Portfolio AUM Reaches Record S\$8.7 Billion: Portfolio assets under management have grown steadily through strategic acquisitions and value creation, with new additions in renewables, water, waste, and digital infrastructure.
• Healthy Balance Sheet and Financial Metrics: Net gearing remains conservative at 38%, with 71% of foreign currency distributions hedged and a weighted average debt maturity of 3.1 years. Interest coverage ratio stands at a robust 13.1x, indicating strong financial resilience.
• Completion of Multiple Strategic Acquisitions: Recent deals include the acquisition of German Solar Portfolio, Keppel Marina East Desalination Plant, and almost full ownership of Ventura, reinforcing portfolio diversification and recurring income streams.
• Operational Strength Across Segments:
  • Energy Transition: City Energy posted higher YoY gas volumes and service income, while renewables showed mixed results due to weather and market pricing. Transition assets like KMC and AGPC delivered stable contracted revenues but were impacted by higher interest rates post-refinancing.
  • Environmental Services: EMK’s incineration business remained stable, with early refinancing extending loan maturity to 2030. Singapore assets delivered contractual results, though Senoko WTE’s contribution declined post-concession extension.
  • Distribution & Storage: Ixom and Ventura contributed strongly, with Ixom’s EBITDA surging and Ventura showing full-period contribution and CAPEX-funded growth.

Potentially Price-Sensitive Developments for Shareholders

• GMG Acquisition – Transformative Digital Infrastructure Move:
  • The planned acquisition of GMG signals KIT’s strategic pivot towards digital infrastructure, a sector with strong secular tailwinds from global digitalisation. If approved by unitholders, this could significantly enhance recurring income and portfolio diversification, potentially impacting KIT’s valuation and share price.
  • The EGM on 11 November 2025 is a critical event; investor sentiment and the outcome could be highly price-sensitive.
• Capital Recycling and Redeployment: The unlocking of S\$301m from asset sales provides dry powder for yield-accretive opportunities. How management deploys these funds could affect future earnings momentum and share valuation.
• Robust Financial Position – Acquisition Capacity: With S\$530m in undrawn facilities, healthy gearing, and strong interest coverage, KIT is well-positioned for further acquisitions and growth, possibly raising investor expectations for future deals.
• Portfolio AUM Growth: The expansion to S\$8.7b AUM through disciplined acquisitions and asset recycling confirms management’s ability to execute its stated growth strategy, likely to be viewed positively by the market.
• Dividend Sustainability and Growth: The 59% surge in distributable income, coupled with stable operations in core segments, underpins dividend stability and potential growth, which is central to the investment thesis for business trust investors.
• Debt Refinancing and Interest Rate Risk: Early refinancing of EMK’s loan and active debt management reduces financing risk. Management notes a 25bps interest rate change would impact DI by about 0.8%, signalling limited sensitivity to rate hikes.

Detailed Operational and Financial Review

Energy Transition Segment

City Energy delivered strong results with higher gas volumes and service income. Transition assets maintained contracted availability, though AGPC faced higher interest costs post-refinancing. Wind assets showed production recovery but remain exposed to market pricing volatility, especially in Sweden.

Environmental Services Segment

EMK’s incineration operations performed steadily, with Singapore assets meeting contractual obligations. However, Senoko WTE’s lower contribution post-extension and pricing discipline in landfill business affected segment FFO. The group is exploring further concession extensions to mitigate these impacts.

Distribution & Storage Segment

Ixom’s chemical distribution business delivered a 60% YoY FFO increase, while Ventura’s full-period contribution and CAPEX-funded growth added significant value. The divestment of Philippine Coastal was completed, freeing up capital for redeployment.

Balance Sheet Strength

Cash reserves stand at S\$624m, net debt at S\$2.36b, and total assets at S\$6.2b. Net debt/EBITDA improved to 4.6x, and net gearing lowered to 38% following divestments. Debt maturity is well spread, and 77% of debt is fixed or hedged, mitigating interest rate risk.

Capital Management and Sustainability Commitment

KIT’s capex plan for 2025 earmarks S\$17m for energy transition, S\$8m for environmental services, and S\$70m for distribution & storage maintenance. The trust maintains an ‘A’ MSCI ESG rating, has set a net zero target for scope 1 and 2 emissions by 2050, and reports strong governance with zero incidents of non-compliance, corruption, or fraud.

Strategic Outlook and Investor Considerations

• KIT’s entry into digital infrastructure through the GMG acquisition could materially change its risk-return profile and growth trajectory.
• Ongoing capital recycling, disciplined acquisitions, and robust balance sheet provide flexibility for further scale and dividend growth.
• Investors should monitor the outcome of the upcoming EGM, asset deployment strategy, and any subsequent acquisitions as key potential share price movers.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The information is based on the latest available report from Keppel Infrastructure Trust as of 3Q 2025 and may be subject to change.

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