Keppel unveils 10-year roadmap, to focus on 4 units

Singapore

SINGAPORE conglomerate Keppel Corp has unveiled a 10-year roadmap that sharpens the lens on four key segments from offshore & marine to property and grow the units as an integrated business with an eye on M&A plus divestments of selected assets.

Under Vision 2030, which took a year in the making and was completed last month, the diversified firm has redefined its businesses into energy and environment, urban development, connectivity and asset management.

Keppel - one of the world's largest oil-rig makers - also wants to shift away from lumpy project-based earnings to chase the vaunted recurring income with the hope of being rewarded with a market re-rating, and crank up efforts to meet a 15 per cent return on equity (ROE) target.

"This plan is a big step up (from Vision 2020 adopted in 2014). The Keppel of 2014 is very different from the Keppel of 2020. Much water has gone under the bridge. My colleagues are bolder now," Keppel chief executive Loh Chin Hua told The Business Times.

"We started out as a conglomerate with disparate businesses unified by name and a common heritage to one that is clearly an integrated business. We are breaking down the silos to work more synergistically," he said. Mr Loh.

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To build a "connected value chain" and capture "new profit pools", Keppel's individual business units can tap the synergies across the group that may not have been available to them earlier such as floating data centre parks or large-scale urban developments.

Keppel will zero in on renewables, environmental solutions, nearshore floating infrastructure, connectivity solutions including green data centres and smart district development and wants to turn into a "powerhouse of solutions for sustainable urbanisation".

It will also pro-actively activate its sizeable landbank in China as well as Vietnam to recycle capital.

Keppel Capital - the group's asset management arm - will be an "important twin" to help fund the solutions created by the group, said Mr Loh.

Keppel's blueprint is being launched in the midst of Temasek Holdings' pre-conditional partial offer to gain control of the firm.

In all likelihood, the S$4 billion deal appears to be on track - the offer's long stop date is Oct 21, while it is understood that clearance of relevant regulatory and authorities is making progress.

Once Temasek gains control, the state investment firm plans to launch a comprehensive strategic review of Keppel's businesses, which analysts say offers potential for value unlocking. Temasek had said that it intends to work together with Keppel's board on the review.

"A large part of this process (Vision 2030) had already taken place well before the pre-conditional offer in October. We have to plan for the long term and have a vision that can serve as a rallying point for Keppelites... particularly at this point of time when there is a lot of uncertainty," said Mr Loh.

"It's not all about profits but also how we can be a part of creating greener urban spaces. This vision transcends Covid-19 and any short-term events for the group. We believe it will resonate with all parties," he said in response to a question on the plan's timing, merely months ahead of Temasek potentially taking control of the company.

"There is a certain presumption in the question that the partial offer will actually be launched. It is still a preconditional partial offer," Mr Loh replied.

"Of course, there is always a possibility that after we do this (roadmap), the partial offer is actually launched, it becomes successful. Temasek did say in the announcement that it would do a strategic review. I think as management and board, if there are good ideas that come from shareholders, we should always be open in considering."

Keppel's multi-year plan to lead its transformation over the long term with interim targets for 2025 follows a six-year strategy that was laid out back in 2014 - this was also the year when Mr Loh took over the reins as Keppel's chief - and is being launched against the backdrop of an oil price slump and coronavirus pandemic.

"Our belief is that Covid-19 will not change some of the trends that have already started. If anything, many trends such as digitalisation and climate change will accelerate," he said.

Around 30 young Keppel leaders across its business units contributed their ideas that took into account emerging trends and the group's track record and capabilities in the making of Vision 2030.

Keppel's shares fell 6 Singapore cents or nearly 1 per cent to finish the day at S$5.97.