The group said it had monetised some $347 million in assets year-to-date, mostly from the divestment of its assets in China and Vietnam.
To CGS International analyst Lim Siew Khee, the figure marked a "decent progress" compared to the $108 million sold in 1Q2025.
"We estimate [around] $245 million of gains to be recognised from these, providing earnings upside to our forecast as we have previously pencilled in [an estimated] $210 million of divestment gains in FY2025," Lim writes in her April 24 report.
In its update, Keppel also announced that it is in "advanced stages" of negotiations to monetise another $550 million in real estate assets over the next few months. During Keppel's results call, its CEO of its real estate arm, Louis Lim, said that the assets were in markets like India and Singapore.
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To Lim, some of the projects that could be up for sale are I12 Katong or the Mumbai Urbania Township. To this end, the analyst believes that Keppel is likely to sell over $1 billion in assets by the end of 2025. This includes the partial sale of M1 and RigCo. The pace of the group's asset monetisation activities supports the analyst's FY2025 dividend estimate of 35 cents, representing a yield of 5.2%.
With the direct impact of tariffs on Keppel expected to be limited, Lim has kept her "add" call with an unchanged target price of $9.28.
During the results call, CEO Loh Chin Hua said that the impact is likely to be "limited" as Keppel is not engaged in the manufacturing or export sectors.
"Keppel and Seatrium have also agreed that the segregated account arrangement be terminated and Keppel has 'no further liability' in respect of the identified liabilities. With this, $291 million of cash is released and accessible," Lim notes. "As of April 17, Keppel still has a 1.87% stake in Seatrium or 63.4 million shares or ($120 million based on $1.90/share)."
On the lower oil prices, which has some negative impact on offshore and marine market sentiment, Lim says Keppel is still focused on marketing uncontracted rigs and has been receiving enquiries for charter to operate in Brazil, North Sea, Gulf of Mexico and Southeast Asia.
In FY2025, Lim believes there is earnings upside to her full-year group net profit estimate of $864 million.
UOB Kay Hian analyst Adrian Loh has also maintained his "buy" call on Keppel due to its higher net profit, stable infrastructure numbers and traction in its asset monetisation efforts, which was "one of the key highlights".
On the termination of the segregated account between Keppel and Seatrium, Loh posits that this could be paid out of a special dividend, assuming that the shares are monetised. Based on Seatrium's closing price of $1.93 as at April 24, this equates to some 23 cents per share attributed to Keppel, he says.
"However, we highlight management's comments that it would look to balance shareholders' desire for income versus the company's growth and asset recycling strategy," he adds.
The analyst has kept his target price at an unchanged $9.25.
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"Keppel currently trades at FY2025 P/E of 11.6 times and P/B of 1.1 times while delivering a prospective yield of 5.7%," he says. "We view these investment metrics as inexpensive, especially considering the company's more stable earnings stream given the divestment of its offshore marine business. In 1QFY2025, more than 80% of the company's net profit came from recurring income (excluding legacy offshore & marine assets)."
Loh has increased his FY2025 net profit estimate by 10.5% to account for the divestment and remeasurement gain arising from the monetisation of its Tianjin asset. Keppel announced, on April 23, that it sold a 30% stake in its wholly-owned Tianjin Fulong Property Development Co to Tianjin Shunhua for RMB503.3 million ($92.8 million).
Keppel's shares 'undervalued', 'underappreciated defensive play'
The team at DBS Group Research lauded Keppel's "stronger-than-expected" core operational performance in the 1QFY2025, with net profit up by 25% y-o-y. However, the team notes that the group's asset management fees, which rose by 9% y-o-y to $96 million, was slower than expected, compared to the $120 million to $137 million per quarter as reported in the 2QFY2024.
Keppel's asset monetisation figure year-to-date was also "commendable" given the current market conditions.
That said, the group remains an "underappreciated defensive play" amid the volatile market with over two thirds of earnings from energy and connectivity.
"Keppel emphasises that it provides many essential services which ensure their earnings stability as demonstrated during Covid," says DBS. "Despite possible indirect impacts from trade wars on supply chain cost, forex and asset monetisation, which are too early to quantify, management remains confident to weather through the uncertainties."
"The asset monetisations pipeline also provides cushion to downside risk from real estate valuation and asset management fees," the team adds.
DBS has maintained its "buy" call and target price of $9. The stock offers an "attractive" yield of over 5%, it adds.
Morningstar Research analyst Xavier Lee has maintained his "four star" rating on Keppel with an unchanged target price of $8.60, the lowest among the analysts here.
That said, the analyst, who notes Keppel's transformation plans as being "on track", sees the group's shares as being "undervalued".
"We believe Keppel remains undervalued and expect it to continue to demonstrate resilience even amid global trade tensions, given its strategic focus on essential services such as infrastructure, connectivity, and data centres," he writes.
On Keppel's funds business, Lee notes that the group has raised $1.6 billion in equity, which is 3.5 times higher y-o-y. This includes the first closings for Keppel Education Asset Fund II and Keppel Data Centre Fund III.
"According to the management, while smaller pension funds may adopt a cautious approach in the current volatile market conditions, bigger and more-established pension funds, as well as sovereign wealth funds with long-term investment horizons, remain well-positioned to capitalise on opportunities. As such, Keppel continues to see good traction and demand from them in its fundraising efforts."
As at 2.26pm, shares in Keppel are trading 13 cents lower or 1.96% down at $6.51.
