Keppel (SGX:BN4)'s 1H24 core net profit, excluding losses for legacy O&M assets, broadly in line, with support from infrastructure earnings.
1H24 results a mixed bag but fundamentals are intact
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Looking beyond these noises, 1H24 core profit of S$513mil (+7% y-o-y; -5% h-o-h) was broadly in line, making up ~49% of our FY24 estimate.
Integrated Power Operations remained the star performer, offsetting weakness in Real Estate. Connectivity was relatively steady.
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Losses for Legacy O&M assets should narrow, if not reverse.
Of the S$209m losses for Legacy O&M assets registered in 1H24, ~S$67m was attributable to Seatrium's share price decline (from ~S$2.40 as of end 2023 to S$1.40 as of end Jun-24). Keppel has a remainder of 1.37bn shares or ~2% stake in Seatrium (SGX:5E2) to encash. We find comfort that Seatrium's share price has since recovered to above the S$1.60 level.
Floatel’s losses (~S$34m attributable to Keppel) was partly impacted by extra cost required to redeploy two vessels. Such losses should narrow or reverse in 2H with the booming chartering market.
The remaining half of the losses was attributable to AssetCo Vendor Notes, which is a function of net interest and amortization charges. Management has stressed its priority to monetise these assets amidst robust demand.
Infrastructure earnings up 25% y-o-y to S$363mil in 1H24
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
