KPELF - Keppel Corporation (KPELF) Q4 2023 Earnings Call Transcript

2024-02-01 03:49:02 ET

Keppel Corporation (KPELF)

Q4 2023 Earnings Conference Call

January 31, 2024, 09:00 PM ET

Company Participants

Loh Chin Hua - CEO

Kevin Chng - CFO

Christina Tan - CEO of Fund Management and Chief Investment Officer

Cindy Lim - CEO of Infrastructure

Lu-yi Lim - CEO of Real Estate

Manjot Singh Mann - CEO, M1

Conference Call Participants

Derek Tan - DBS

Joy Wong - HSBC

Mervin Song - JPMorgan

Siew Khee - CIMB

Dexter Wei - Bloomberg News

Presentation

Operator

Good morning, ladies and gentlemen. Welcome to the Conference for Keppel Limited Second Half and Full Year Financial Results for 2023. We have on the panel this morning, from your left Mr. Manjot Singh Mann, CEO, M1; Mr. Lu-yi Lim, CEO of Real Estate; Ms. Christina Tan, CEO of Fund Management and Chief Investment Officer; Mr. Loh Chin Hua, CEO; Mr. Kevin Chng, CFO, and Ms. Cindy Lim, CEO of Infrastructure. Mr. Thomas Pang, CEO of Datacenters and Networks is not feeling well and will not be attending the session today.

We will begin the session with presentations by CEO Mr. Loh Chin Hua, Chang Hua and CFO Mr. Kevin Chng, followed by the question-and-answer session. Mr. Loh, please.

Loh Chin Hua

Thank you. Good morning, everyone. 2023 has been one of the most transformational years in Keppel’s history. Amidst the volatile global environment we took pivotal steps to transform Keppel, starting with the successful divestment of the offshore and marine business, which allows us to realize some S$9.4 billion in value overtime. We then unveiled the next phase of our vision 2030 transformation, shedding our conglomerate structure become a global asset shedding our conglomerate structure to become a global asset manager and operator.

This was followed by the proposed strategic acquisition of Aermont Capital, which we announced in November to propel our growth as an asset manager at a global scale. Reflecting Keppel’s new direction, we change our name with effect from January 1, 2024. Keppel Corporation Limited, to Keppel Ltd. marking a new chapter in our corporate journey.

Today, we are operating more efficiently as one horizontally integrated company, harnessing synergies across our three segments. We made good progress in the goals we set by third Q’23, we had already exceeded the upper bound of our three-year asset monetization target of S$3 billon to S$5 billion. Since October 2020, we've announced the monetization of about $5.4 billion of assets and release some S$4.1 billion in cash over this period, to reinvest for growth and reward shareholders.

Our transformation efforts have been recognized by the market and our investors. Against the challenging landscape, we achieve total shareholder returns are TSR of 49.3% for 2022 and 61.1% for 2023, far exceeding the TSR of the Straits Times index in both years. But we're not done yet. We will continue to scale up our funds under management, grow recurring income and monetize our assets as we execute our vision 2030 strategy.

For the whole of 2023 we achieved a net profit of close to $4.1 billion more than quadruple that of financial year ‘22. This is the highest profit ever recorded by Keppel in our 55-year history. About S$3.3 billion of this was from gains achieved from successfully divesting the O&M business. Our return on equity was 37.9% for financial year ‘23 compared to 8.1% a year ago. Net Profit from continuing operations was S$996 million in financial year ‘23 19% higher than the 839 million in financial year ‘22. All segments were profitable, with sharply improve performance in our Infrastructure segment.

Including the accounting loss of 111 million from the distribution of capillary units to our shareholders in November 2023, net Profit from continuing operations was S$885 million in financial year ‘23 or 6% higher year-on-year. For financial year ’23 -- sorry for second half ‘23, we delivered a robust net profit of S$551 million, up 36% from S$405 million in second half ‘22, excluding the discontinued Offshore and Marine Operations from both periods and DRS loss.

Including the DRS loss net profit for the second half of last year was S$440 million, a 9% increase year-on-year. As you can see, the composition of our profits is very different from what it was a few years ago, when the majority of our earnings were from the lumpy O&M order book business and the property trading business.

Keppel today is no longer a rig builder, not a property developer. We are global asset manager and operator with complimentary segments in infrastructure, real estate and connectivity, all contributing positively to the company's earnings.

While earnings from real estate will lower year-on-year. The segment continued to perform creditably and contributed significantly to our net profit, despite challenging conditions in markets like China. On the bank of Keppel’s strong performance and reflecting our confidence in a company's growth trajectory, the board of directors has proposed a final cash dividend of S$0.19 per share for financial year ‘23 which will be paid to shareholders on May 8, 2024. The final cash dividend is higher than last year's final dividend of S$0.18 per share. Together with the interim cash dividend of S$0.15 per share paid in August 2023, shareholders will be receiving a total cash dividend of S$0.34 per share for the financial year 2023. This translates to a cash dividend yield of 4.7%, based on Keppel's closing share price of S$7.16 last evening. ...

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