How to interpret Keppel Corporation's (SGX: BN4) Q1 FY2024 Earnings Report?

On April 25, 2024, Keppel Ltd. announced its voluntary business update for the first quarter of 2024. The report indicated an increase in year-on-year net profit, with the figures adjusted to exclude the influence of its traditional offshore and marine assets. This growth in net profit is attributed to stronger performances in the Infrastructure and Connectivity divisions.

However, when including the impact of the legacy offshore and marine assets, the net profit showed a year-on-year decline.

Revenue for the first quarter of 2024 stood at SGD 1.5 billion, slightly lower than the SGD 1.6 billion reported in the corresponding period of 2023. Despite this, increased earnings from the Infrastructure and Connectivity sectors offset the decline in the Real Estate segment.

Keppel reported approximately SGD 170 million in asset disposals for the quarter, including the planned sale of a residential project in Wuxi, China. This is set to bring the company's cumulative asset disposals to over SGD 5.5 billion since October 2020.

The asset management fees for the first quarter of 2024 saw a year-on-year increase of 52%, amounting to SGD 88 million, with improvements across all three business divisions. The company has received final approval from European regulators to complete the strategic acquisition of an initial 50% stake in Aermont Capital S.à.r.l., which is expected to be finalized by the end of April 2024.

(1) Fund Management and Investment Platform: Keppel generated SGD 88 million in asset management fees in the first quarter of 2024, marking a 52% increase year-on-year, driven by contributions from all three vertical divisions. Since the beginning of the year, the company has raised approximately SGD 436 million in equity and has completed around SGD 1.1 billion in acquisitions and disposals.

(2) Operational Platforms: Keppel continues to strengthen its operational divisions, including Infrastructure, Real Estate, and Connectivity. The Infrastructure division has continued to consolidate its position as a leading integrated energy player in Singapore and the region.

The first-quarter 2024 business update from Keppel Ltd. showed a growth in net profit, even with a modest decrease in revenue. The company is proactively reorganizing its asset portfolio, engaging in both divestitures and strategic acquisitions to reinforce its principal operations.

The increase in asset management fees and the nearing finalization of the Aermont Capital acquisition indicate Keppel's robust progress in the asset management domain. Keppel is methodically progressing towards its objective of becoming a prominent energy entity in the region, thereby establishing a substantial groundwork for prospective expansion.