This article first appeared on GuruFocus .
Release Date: July 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Keppel Ltd ( KPELF ) delivered a strong net profit of $530 million in the first half of 2026, up 25% year-on-year, driven by strong contributions from sponsor stakes and co-investments.
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The company surpassed its end-2026 target of $100 billion in funds under management (FUM) ahead of schedule, reaching $106 billion in July 2026.
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Recurring income expanded by 13% year-on-year to $467 million, supported by stable performance from asset management and higher contributions from operations.
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Keppel Ltd ( KPELF ) achieved key operating milestones, including the full commercialization of the Bifrost cable system and the commencement of operations at the Keppel-Sakra Cogen Plant, Singapore's first hydrogen-compatible power plant.
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The company secured a $1.5 billion commitment from Apollo for the Keppel Offshore Fund, creating a clear pathway to monetize up to $3.7 billion of legacy rigs and generating cash proceeds of about $611 million in 2026.
Negative Points
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The non-core portfolio recorded a net loss of $375 million in the first half of 2026, primarily due to impairments on legacy rigs and interest costs.
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Overall net profit for the period was only $155 million, down 59% year-on-year, due to accounting losses from the non-core portfolio.
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Net debt to EBITDA for the overall company increased to 6.7 times as of end-June 2026, up from 5.8 times at end-December 2025.
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The real estate segment recorded a net loss of $19 million in the first half of 2026, compared to a net profit of $98 million in the prior year, due to lower divestment gains and fair value losses.
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The termination of the M1 Telco sale led to the release of suspended depreciation and amortization, contributing to a net loss of $65 million from investments, M1 Telco, and others.
Q & A Highlights
Q: The infrastructure segment performed well despite lower spark spreads. Can you disclose the growth in the decarbonization business in the first half, and were you forced to source elevated gas from SLNG due to a force majeure? Will this continue into the second half? A: Cindy Lim, CEO, Infrastructure: The decarbonization and sustainable solutions (DSS) business revenue under long-term contract has grown to $8 billion to be delivered over the next 10 years, providing recurring income visibility. Regarding the force majeure, we sourced replacement gas in April, but our resilient gas supply infrastructure and fuel backup strategy remained intact. The timely commencement of the Sakra Cogen plant more than offset the cost impact. As of now, we have not crystallized any sourcing of replacement gas at elevated levels for the second half.
Q: With the $13.5 billion fund raise in July, how should we think about deployment and associated fees going forward, as fee income seems to be lagging behind fundraising? A: Christina Tan, CEO, Fund Management and Chief Investment Officer: The fundraising is a significant inflection point for our asset management business. A large part of the $13.5 billion was raised in July, so fees will start to kick in from the second half. For deployment, we are actively working on transactions in digital infrastructure, including new subsea cable systems, and renewable energy projects. You can use the annualized fee rate on the fund raised to estimate the magnitude of future fee income.
Q: Regarding the Keppel Offshore Fund (KOF) and the legacy rigs, can you explain the sensitivity analysis on page 17, specifically what a 12-month delay in deployment would mean? A: Kevin Cheng, CFO: The disclosure on page 17 explains our approach to valuing the rigs on a value-in-use basis. The sensitivity analysis is a standard part of the model, assuming a potential schedule delay. However, we are not planning for any delays as we now have a clear path forward to complete and monetize the rigs. The fundamentals of the rig market are improving, which supports our thesis.
Q: For the non-core portfolio, the rig impairments were $165 million. Going forward, should we expect more impairments, and what about the interest costs associated with the remaining rigs? A: Loh Chin Hua, CEO: We cannot forecast impairments, as they are based on a semi-annual assessment. However, the rig market fundamentals are improving. Regarding interest costs, once the six rigs are monetized into the fund, they will be deconsolidated from our balance sheet, which will reduce the interest cost burden.
Q: On the M1 telco business, you have a three-year plan to achieve $70 million in annual run-rate cost savings by 2028. What is the EBITDA margin improvement this implies, and does this mean you are not looking to sell M1 for three years? A: Manjot Singh Mann, CEO, Connectivity and CEO, M1: The $70 million is a run-rate target by 2028. We expect our exit EBITDA for 2027 to be significantly higher than 2026. We have already realized $4 million in savings year-to-date. This is a playbook we have used before to improve value. It does not mean we have to wait three years to sell; tangible benefits can factor into any potential discussion. We continue to believe consolidation is needed for Singapore's telco sector.
Q: You have surpassed your $100 billion FUM target ahead of schedule. What do you see as the biggest constraint to growing to $200 billion FUM over the next few years? A: Christina Tan, CEO, Fund Management and Chief Investment Officer: We see strong and continuing interest from LPs due to Keppel's operational capabilities in digital infrastructure, renewables, and real estate. We are not concerned about fundraising demand. We also have a strong pipeline of proprietary deals created by our operational divisions. The key is to maintain rigorous underwriting and good execution to deliver the returns our investors expect.
Q: For the connectivity segment, revenue is over $600 million but operating profit is only $30 million. What are the key drivers, and how should we forecast this segment? A: Manjot Singh Mann, CEO, Connectivity and CEO, M1: The segment has multiple parts. The subsea cable business generates O&M revenue over 25 years, with costs increasing as cables age. The technology solutions business is top-line driven as a system integrator and reseller. We are improving margins by creating centers of excellence in high-cost countries and delivery hubs in low-cost countries, which has already improved margins by over 30% year-on-year. Over time, you will see margins improve.
Q: On the real estate segment, what drove the net loss of $19 million in the first half of 2026? A: Louis Lim, CEO, Real Estate: Excluding the distribution-in-specie (DIS) loss from Keppel REIT units, the segment would have been profitable at $32 million. The loss was mainly due to the absence of gains from the partial disposal of Saigon Centre Phase 3 recognized in the first half of 2025, lower fair value gains on investment properties, and operating losses from some existing investment properties.
Q: For the Keppel Offshore Fund, there is a guaranteed return for the LP, Apollo. Are there any scenarios where there would be a recourse to Keppel or a need to recognize a loss beyond your 50% stake? A: Loh Chin Hua, CEO: The yield that Apollo will receive is roughly matched by the day rates we expect to get. We do not believe there will be a scenario where there is a recourse to Keppel. This structure is a trade-off where the investor gets some downside protection, and we get more of the upside.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
