2 weeks Ago By The Straits Times
Keppel last week disclosed strong growth in its data centre business, and unveiled further improvement in its monetisation efforts. SINGAPORE – Keppel’s latest third quarter business update briefing, which was held last week, showed that the company continues to grow strongly with the key highlight being a 68 per cent year-on-year jump in asset management fees. The company also disclosed strong growth in its data centre business, and unveiled further improvement in its monetisation efforts.
Among the key points highlighted by Keppel chief executive officer Loh Chin Hua during his analysts briefing on Oct 24 was a 68 per cent year-on-year jump in asset management fees to $299 million during the nine months to end-September 2024, surpassing full year 2023 figures. Mr Loh also disclosed that Keppel’s funds under management more than doubled since 2021 to $85 billion as at end-June, with some $25 billion in dry powder to be deployed. Meanwhile, asset monetisation improved quarter on quarter to $453 million during the July to September period, bringing year-to-date assets monetised to $733 million.
Keppel’s latest divestments were in Vietnam where it sold a 70 per cent stake in Saigon Sports City for $391 million, and a 16 per cent stake in Saigon Centre Phase 3 for $62 million. Being a business update largely for analysts, Keppel did not provide revenue and profit numbers during the briefing. Keppel’s data centres were a key focus during the analyst call, with management pointing to multiple fee-generation opportunities due to its position as an asset manager and operator.
For the first time, the company unveiled it had total data centre gross power capacity of 650MW across 35 assets, with the bulk of capacity under development set to come online between the current fourth quarter and 2027. Keppel said its growing power footprint in Singapore could reach nearly 3GW by 2030, which analysts noted was equivalent to around one-third of the market. Keppel said it would double its data centre capacity via the deployment of Keppel Data Centre Fund III, and co-investment opportunities, raising its DC funds-under-management from $9 billion now to $19 billion.
The bulk of new data centre investments are greenfield opportunities in Asia and would require three to five years to complete, Mr Loh added. Analysts generally seemed to like what they heard. UOB Kay Hian maintained a buy rating on the stock with a target price of $8.
89, while CGS International had a sum-of-parts target price at $8.28, citing Keppel’s sizeable asset monetisation, and quick recovery of China’s property market as re-rating catalysts. “We continue to like Keppel for its improving earnings quality and asset monetisation angle,” wrote CGS-CIMB analyst Lim Siew Khee.
“Better appreciation of data centre profits should be supportive of longer-term re-rating opportunities, in our view.” DBS Research reiterated its buy call on Keppel with a target price of $9.00, citing attractive dividend yield at around 5 per cent.
Over the past year, the 60-year-old company has reconfigured itself to become a cash rich global asset manager and an operator of sustainability-related infrastructure assets. One of its biggest moves was the February 2023 sale of its Keppel Offshore & Marine – one of the world’s largest rig-builders – to Sembcorp Marine, resulting in the creation of Seatrium. Keppel’s stock closed three cents lower at $6.
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