JP Morgan points out Keppel guided that power spreads fell by around $10 before the Iran War but rose to $30 for shorter-term contracts, after the war started. At end-2025, 52% and 15% of power capacity were on 3-10 year and more than 10 year contracts, respectively. 28% of power contracts are on 1-3 year contracts, with just 5% on sub-1-year contracts. As at March 31, 30% of power contracts are 3-10 year terms with 15% on more than 10-year contracts, 47% on 1-3 years and 8% on less than 1 year.
The majority of gas supplies is sourced from Malaysia. Keppel Sakra Cogen Plant has completed high-load commissioning and is on track for generation readiness in 1H2026, with electricity supply to customers expected mid-2026.
On the FUM front, Keppel raised $400 million in the first quarter. Flagship funds continue to gain traction with LPs, including Middle East investors, supported by a $36 billion deal flow pipeline for deployment and future fee generation, Keppel had indicated. Asset management fees rose 13% y-o-y during the quarter to $108 million.
The divestment target for 2026 stands at $2 billion to $3 billion, potentially including Keppel South Central and residential projects. More recently the divestment of i12 Katong - for a small loss -was announced. Keppel is also looking to complete the sale of two subsea cables and has since completed the disposal of its Seatrium shares.
See also: Addvalue surges after SGX's nod for Nasdaq spin off; Maybank raises target price to 31 cents
The concern, if any, was over the delayed sale of M1 because of regulatory approval. “We expect Keppel’s share price to remain range-bound near-term, as many investors in our discussions are concerned that the M1 sale may fall through or that disposal terms may need to be amended to address regulatory concerns. The revised long-stop date for the M1 transaction is 21 May 2026,” the JP Morgan report says.
On a positive note, Rigco which holds the legacy rigs is likely to do well. Day rates have risen 10-15%, with Keppel receiving more enquiries due to the oil price hike. Keppel is preparing to complete the development of its seven uncompleted rigs for charter, with associated capex below the $400 million cash held in Rigco. “No force majeure has been declared for the five rigs in Saudi Arabia. Keppel is hopeful remains hopeful that charters for these rigs will be extended at higher rates,” notes the JP Morgan report.
