FY 2023 Full-Year Financial Results Webcast & Q&A Session

Congrats on the spectacular set of results. You set yourselves a very high base for 2024. Could you give us a sense in terms of growth, acquisitions or divestments? What should we be expecting? Do you have a divestment target for 2024?

LCH

Thank you for the questions. Well, we have been working really, really hard for the last few years transforming Keppel. It was not done over a single year. And one of the biggest contributions from last year was the divestment gains from the sale of Keppel Offshore & Marine (KOM). And that took a number of years, but of course it was accounted for last year. Besides the gain, I think what is probably important to note is that yes, we have quadrupled the profits and we have hit a record high in the Company’s 55-year history. But what is most important is that we have really transformed Keppel. I think if you think back even five or six years ago, the kind of earnings that you see compared to what we have today. We have achieved one of the key tenets of Vision 2030, which was to move away from lumpy profits to recurring income and to be asset light. So, I think this is playing itself out very well and you can see that from the results. Beyond the very good numbers that we have shown, I think for this year, obviously I do not have another KOM to sell, but I think if you compare continuing operations, we have also done very well. So if you take out the distribution in specie loss, last year’s numbers were also more than decent; in fact, it was quite good. The Real Estate segment has contributed less, but given all the challenges that we have there, you can see we have also done very well. Infrastructure has been spectacular for us and we do believe it is recurring. We are working towards that. For this year, our goal will be to continue to press on. You know, we are all quite an ambitious group. So it is not just me – we want to do even better and accelerate more. So, I think this year would be quite interesting. The external environment is quite challenging, but as I said in my speech, our businesses are in areas that are in demand, whether you're looking at infrastructure or connectivity, including digitalisation. In real estate, some markets are still finding the bottom, but there are some markets where the deals are starting to look more interesting. I will let Chris talk more on that. So, we do expect to see more funds being raised, more investments to be made. This would help us in several ways. We will get obviously more fees, but we also would expect to see our AUM grow as well. And operations-wise, I think we are set to do the best that we can. So last year was a very high point, but it is by no means the high watermark. I think we expect to do better in the years to come. On the dry powder for your funds, I noticed there is S$9 billion of embedded Funds under Management (FUM). Could you share a bit more colour on where this dry powder sits and which kind of asset class?

LCH

I will ask Chris to address the second question.

CT

Thanks, Derek, for the question. I think 2024 will be a very exciting year for us. Despite the volatile markets that we are seeing, I think that is where we also find good opportunities. We hear a lot of refinancing coming up, and with less debt available, equity players will have a good time trying to find some dislocations in the market and enter the market. Like we said, even last year, we have been very active in looking at deals in the market. The team looked at over S$300 billion worth of deals and then we funnelled through about S$14 billion of deals that we were more seriously considering. And we have indeed been in negotiations with various vendors and some of the deals closed recently. You have heard that the Enpal deal was closed by KIT on the third day of the new year. We are closing another deal soon which will be announced. So actually, I think the pace of investments would be much faster in 2024. With all the global geopolitical issues and a lot of countries having elections this year, we believe that the government would be there to support a more benign market. As for interest rates, people are expecting some tapering off, lowering of the interest rates. I think that will actually all go really well for investments. The three segments – Real Estate, Connectivity and Infrastructure – they are actively working through some of the deals and we are seeing very interesting opportunities happening. And I think the difference is that Keppel, besides being an investor, we have really deep operating capabilities and that actually helps us in terms of extracting additional alpha, rather than just going through financing, structuring, and engineering in that sense. So we remain really excited about this year. On your Infrastructure segment’s operating income of S$655 million, just wondering whether you could give us some colour on whether it is going to be sustainable for this year?