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How Did Keppel Corporation Limited’s Infrastructure Business Fare In 2017?

Keppel Corporation Limited (SGX: BN4) is a conglomerate with four major business segments, namely, Offshore & Marine, Property, Infrastructure, and Investment.

In late January, Keppel Corp reported its 2017 full year earnings. Given that the company has a few businesses, I thought it would be useful to take a separate look at each of the components. In earlier articles, I had discussed the Offshore & Marine and Property segments. In this article, my focus is on the Infrastructure business.

The financial performance

Here’s a table showing some key financial numbers for the Infrastructure business for 2017:


Source: Keppel Corp 2017 full year earnings presentation

We can see that the Infrastructure segment had a good year in 2017. Revenue was up by 27% to S$2.21 billion, mainly due to higher sales in the power and gas business, and progressive revenue recognition from the Keppel Marina East Desalination Plant project. The segment’s recurring revenue also increased to S$160 million due to contributions from the operations and maintenance of infrastructure assets across Singapore and Qatar.

The net profit growth of 33% was due to higher revenue, and also the gain on the sale of Keppel Corp’s interest in GE Keppel Energy Services Pte Ltd. Fair value gains on the segment’s investments also contributed.

The future

In Keppel Corp’s earnings release, the conglomerate shared a few words on the Infrastructure segment’s future:

“In the Infrastructure Division, Keppel Infrastructure will continue to build on its core competencies in energy and environment-related infrastructure as well as infrastructure services businesses to pursue promising growth areas.

Keppel Telecommunications & Transportation (SGX: K11) will continue to develop its data centre business locally and overseas. Besides building complementary capabilities in the growing e-commerce business, it plans to transform the logistics business from an asset heavy business to a high performing asset-light service provider in urban logistics.”

In 2017, the Infrastructure business secured a number of new contracts. For example, Keppel Seghers and Zhen Hua secured a S$5.3 billion contract to design, build, and operate Hong Kong’s first Integrated Waste Management Facility. Keppel Corp’s share of the contract is approximately S$1.95 billion. In other instances, Keppel Seghers secured two new contracts to provide technology solutions to WTE (waste-to-energy) plants in Beijing and Hunan.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.