Keppel Ltd 1Q 2026 Business Update: Detailed Investor Report

Key Highlights and Financial Performance

• Net Profit: Keppel’s net profit for 1Q26 was slightly lower year-on-year (yoy). This decline was mainly due to reduced contributions from the Real Estate segment, which had benefitted from higher valuation and divestment gains in 1Q25. However, this was partially offset by stronger earnings from the Infrastructure and Connectivity divisions.
• Recurring Income: Recurring income saw a slight increase yoy, driven by stable asset management profits and higher operating income.
• Cash Flow: The company’s financial position improved significantly. 1Q26 saw strong free cash inflow, compared to an outflow in 1Q25. Distributions and divestment proceeds from REITs/Trusts and private funds reached almost three-quarters of the total received for FY25, indicating accelerated monetisation and capital recycling.

Asset Monetisation and Capital Recycling

• Asset Monetisation: Keppel announced asset monetisation transactions worth \$385 million year-to-date (YTD) 2026, with \$347 million completed and realised. The company targets to monetise \$2-3 billion of non-core assets in 2026, a significant move that could impact share value due to its potential to unlock capital, reduce debt and reward shareholders.
• Major Deals: Key asset monetisation deals include the sale of the entire 5% stake in Seatrium, valued at \$430 million, and the divestment of i12 Katong in Singapore.
• Total Programme: Since the start of the asset monetisation programme in October 2020, Keppel has announced \$14.9 billion in deals, including major divestments such as Keppel O&M and M1’s telco business.

Asset Management Business Growth

• Fund Management: Asset management fees grew 13% yoy, reflecting stronger performance across Infrastructure, Real Estate, and Connectivity segments. Keppel added \$0.4 billion in new Funds Under Management (FUM) in 1Q26 and is finalising another \$2 billion in Limited Partner (LP) commitments, indicating robust fundraising momentum.
• Deal Pipeline: The deal flow pipeline stands at \$36 billion, with active acquisitions and divestments in data centre, education assets, infrastructure and SUR (Sustainable Urban Renewal) strategies.

Infrastructure Division: Resilience and Expansion

• Power Business: The Integrated Power business performed resiliently despite a slight decline in EBITDA amid softening spreads. Opportunities remain to secure long-term power sales in a tight supply-demand window.
• Hydrogen-Compatible Plant: The 600 MW Keppel Sakra Cogen Plant completed high-load commissioning and is on track for generation readiness in 1H26. The plant is fully contracted for 2026 and 2027.
• Long-Term Contracts: Over \$700 million in new long-term contracts were signed in 1Q26, with the division’s total long-term contracts valued at \$7.6 billion, providing recurring revenue visibility of 10-15 years. The pipeline of active opportunities totals about \$15 billion.
• IWMF Projects: Hong Kong’s Integrated Waste Management Facility (IWMF) is 97% completed, and Tuas Nexus IWMF in Singapore is 83% completed, with recurring income expected from 2026.
• Centralised Cooling: Keppel secured a 20-year contract to provide centralised cooling systems to nine residential projects in Singapore and is partnering Midea to scale AI-enabled modular cooling solutions across Asia.

Connectivity and Digital Infrastructure: Capturing AI-Driven Growth

• Data Centres: Construction commenced on Keppel’s Floating Data Centre, and Keppel DC SGP 9 will begin construction in mid-2026. The company is actively engaging potential customers for large-scale data centre projects, including a 720 MW site near Melbourne.
• Bifrost Cable System: Advanced negotiations are underway with customers for the remaining two fibre pairs, expected to be signed in 1H26. These projects are vital in supporting AI and digital infrastructure growth.
• Portfolio Details: Keppel DC REIT owns 25 assets (2.73 million sq ft, ~\$6.3 billion valuation), and Keppel/private funds own/develop 14 assets (1.88 million sq ft, ~\$2.4 billion valuation), spanning Asia Pacific and Europe.

Real Estate Division: Monetisation and Portfolio Updates

• Residential Landbank: Keppel’s portfolio stands at 31,122 units, with China (46%), Vietnam (28%), Indonesia (14%), India (11%), and Singapore (1%).
• Commercial Portfolio: 1.56 million sqm Gross Floor Area (GFA) across Asia Pacific, with 39% under development. China (34%), Vietnam (26%), India (15%), Indonesia (10%), Singapore (6%), Other SEA (7%), South Korea (2%).
• Monetisation: \$382 million in real estate assets monetised YTD 2026, including the sale of i12 Katong.

Middle East Conflict: Strategic Implications

• Direct Exposure: Keppel’s direct exposure to the Middle East is limited, with no notable direct impact on operations, fundraising, or monetisation thus far. Key assets include the Domestic Solid Waste Management Centre in Qatar, Saudi Arabia gas pipeline, and rig charters.
• Risk Monitoring: The company is closely monitoring the situation for potential second-order effects, such as disruptions in gas supply, rising energy prices, cost inflation, and higher interest rates. Keppel’s gas supply is diversified, and mechanisms (hedging, cost pass-through) are in place to shield the integrated power business from fuel price shocks.
• Potential Impact: Prolonged disruptions could significantly affect Singapore and the region, including Keppel, through macroeconomic effects and operational risks. Investors should be aware of these potential risks, which could affect share value.

Conclusion: Investor Considerations

Keppel’s 1Q26 business update demonstrates continued progress in asset monetisation, strong asset management growth, resilient infrastructure, and strategic moves in digital connectivity. The company’s improved cash flow, ongoing fundraising, and large monetisation targets are potentially price-sensitive, offering upside from capital recycling and downside risks from macroeconomic uncertainties, especially those related to the Middle East. Shareholders should closely monitor developments in asset sales, new contract wins, and geopolitical risks, as these factors could significantly impact Keppel’s share value.

Disclaimer

This article is for informational purposes only and does not constitute investment advice, solicitation, or an offer to buy or sell securities. The information herein is based on Keppel’s 1Q26 business update and is intended for investors’ consideration. Forward-looking statements are subject to risks, uncertainties, and may differ materially from actual outcomes. Please consult your financial adviser before making investment decisions.

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