“In 2026, DI should edge higher on City Energy growth, Ixom uplift, and a full-year Global Marine Group (GMG) contribution, with upside from Eco Management Korea (EMK) and Ventura. With $180 million divestment proceeds and $239 million committed debt headroom, KIT can undertake accretive investments,” notes the analyst in his Feb 4 report.
In the FY2025, funds from operations (FFO) rose 17% y-o-y to $326.1 million and DI grew 23% y-o-y to $249.5 million, pushed by stronger contributions from KIT’s Energy Transition and Distribution & Storage business segments.
Specifically, the Energy Transition, and City Energy segments delivered solid organic growth, while a cash surplus from Aramco Gas Pipelines Company in the 4QFY2025 provided the trust an uplift, which Jasiwal views as non-recurring.
He continues: “Environmental Solutions was mixed, with weaker Senoko post recontract partly offset by a full-year contribution from Keppel Marina East Desalination Plant. Distribution & Storage benefitted from Ixom and Ventura and Digital Infrastructure posted a one-month DI contribution from GMG.”
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With this, Jasiwal omits the $48.9 million in divestment gains from recurring DI as a one-off.
As to what will drive KIT’s DI in the FY2026, the analyst expects three key engines.
The first is in the City Energy segment, which will be supported by continued residential gas water heater penetration and network growth.
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Secondly, the trust’s Australia and New Zealand-based industrial infrastructure business, Ixom, should see underlying momentum plus incremental earnings from the Hilditch acquisition completed in the 4QFY2025.
The third key driver will be the first full-year contribution from GMG in the FY2026.
Jaiswal also sees upside from EMK, with its incineration assets at full utilisation and plans to expand capacity to meet structurally-tight public incineration supply, while he adds that Ventura should deliver steady growth on newly-secured charter contracts.
“Near-term DI growth should also be supported by KIT’s ability to recycle capital into accretive opportunities. KIT has $180 million of uninvested divestment proceeds available for redeployment, alongside a trust-level liquidity of $239 million,” writes Jaiswal.
He adds: “This provides meaningful dry powder for acquisitions and growth while maintaining balance sheet discipline.”
On DPU outlook, Jaiswal is retaining his forecast for FY2026, which is aligned with the trust’s focus on DI and DPU continuity.
He writes: “With a fuller earnings base and continued momentum across key portfolio companies, we expect FY2026 DI to edge the FY2025 reported level, supporting our FY2026 DPU estimate of 3.96 cents.”
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Beyond FY2026, the analyst is “constructive” into FY2027 and beyond on sustained organic growth, portfolio-wide cost efficiencies and selective bolt-ons, implying scope for a 1.0% to 1.5% DPU uplift.
Key drivers for KIT noted by Jaiswal include concession renewals in Singapore, contribution from new acquisitions, the recycling of capital and one-off gains as well as refinancing opportunities.
Conversely, key risks include contract renewal, regulatory and policy changes, the execution of acquisition execution, operational challenges and foreign exchange (forex).
Similarly, the team of Li Jialin and Lim Siew Khee at CGS International (CGSI) have also kept their “add” call at a higher target price of 60 cents from 50 cents previously.
Li and Lim note that KIT’s European windfarm portfolio turned around in the 2HFY2025, as wind speed picked up at its windfarm operator BKR2, while its German solar portfolio saw DI growth of 60%, due to the full deployment of installation in 2025 versus partial deployment in 2024.
On the other hand, they add that EMK’s landfill segment “remained subdued” and extended its loss, totaling $2.2 million in the FY2025.
In Singapore, as at the end FY2025 the trust’s management have successfully extended KIT’s concession agreement with the nation’s Public Utilities Board for the Sing Spring Plant.
“The implication on DI contribution from Sing Spring is around $5 million above our expectation and better than the terms achieved in the previous extension. In addition, we believe the strong traction for Ixom and City Energy will likely continue into the FY2026.” write Li and Lim.
The trust also has plans to scale up EMK’s incineration capacity with an $18 million capital expenditure (capex) plan.
On this, the CGSI analysts anticipate that the expansion of this profit-making incineration business could “potentially lift” the Korea-based EMK from a loss-making position.
They write: “Long-term positive is intact for EMK as the ban on direct landfilling of municipal solid waste in the Seoul Metropolitan Area (SMA) comes into effect in January 2026. KIT will leverage Keppel’s operating expertise in waste management, and time the expansion works during EMK’s scheduled maintenance.”
With this, Li and Lim have lifted their FY2026 DPU to 3.98 cents, implying a FY2026 yield of 7.6%.
Re-rating catalysts noted by the pair include landfill gate pricing in South Korea and accretive acquisitions while key downside risks include unfavourable weather conditions and policy risks.
As at 2.46 pm, units in Keppel Infrastructure Trust are trading one cent higher at 53 cents.
