Keppel Infrastructure Trust - OCBC Investment 2024-05-03: In Constant Pursuit Of Portfolio Expansion & Value Creation

• Keppel Infrastructure Trust (SGX:A7RU) provided a 1Q24 business update. Adjusted EBITDA for the quarter came in at S$130.7m, up 3.8% y-o-y on the back of contributions from the newly acquired solar portfolio in Germany, as well as the resumption of contributions from Keppel Merlimau Cogen Plant (KMC).

Distributable income (DI) down 29.1% y-o-y

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• The Environmental Services segment continued to deliver stable performance, with segmental distributable income up 3.7% y-o-y to S$20.9m.
• Distributable income from the Distribution & Storage segment, however, was down 32.8% y-o-y to S$15.8m due to one-offs at both Ixom and Philippine Coastal.
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Lower 1Q24 DI due to one-offs

• Distributable income at Ixom fell 28.4% y-o-y to S$15.1m due to higher finance cost, CAPEX, and operating expenses; while there was some FX impact, management shared that this was not material. We note that Keppel Infrastructure Trust has hedged 66.5% of foreign currency distributions as at 31 Mar 2024 to mitigate FX headwinds.
• Meanwhile, distributable income at Philippine Coastal fell by 70.7% y-o-y to S$721k, on the back of S$3.3m worth of growth CAPEX and higher one-off upfront financing costs. Capacity expansion works at the asset are expected to be completed by 2H24.
• Nonetheless, underlying performance of these businesses remained healthy, in our view. In particular, Philippine Coastal secured the renewal of a major customer contract, and achieved a high tank utilization rate of 96% during the quarter.

Extension of CTA for KMC allows the asset to resume DI contributions

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Ada Lim OCBC Investment Research | https://www.iocbc.com/ 2024-05-03 SGinvestors.io

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