Keppel Infrastructure Trust - Underlying distributable income falls 32% in 1Q25

Underlying distributable income falls sharply

Keppel Infrastructure Trust (KIT) reported underlying 1QFY25 Distribution Income (DI) of $45.5 million, down 31.9% year-on-year (yoy). 

Including divestment gain from sale of Philippine Coastal Storage and Pipeline Corporation (PCSPC) in 1Q25 and adjustment for growth capex and upfront financing fee of Philippine Coastal and performance fees in 1Q24, reported DI rose 27.7% yoy to $65.0 million.

Energy Services impacted by weaker contribution from renewables portfolio

Energy Transition reported 21.9% yoy decline in DI to $38.9 million, attributed to higher interest cost and lower throughput at Aramco Gas Pipelines Company (AGPC). 

Renewables reported negative $1.8 million DI due to lower wind production and higher tax paid. 

German Solar Portfolio’s DI was $8.3 million, -33% yoy. However, it would have been +30% yoy if 1Q24 DI was adjusted for timing of interest expense recognition. 

These were partly offset by Keppel Merlimau Cogen (KMC)’s 100% contracted availability for 1Q25.

Lower contribution from Senoko WTE

Environmental Services’ DI fell by 68.8% yoy to $6.5 million due to lower contribution from Senoko waste-to-energy (WTE) and extension capex totalling $14.3m. 

Eco Management Korea (EMK) also reported negative contribution due to volatility in landfill price. 

On the other hand, the segment started to record contribution from Keppel Marina East Desalination Plant (KMEDP).

Distribution and Storage supported by contribution from Ventura

Distribution & Storage ‘s DI grew by 49.8% yoy to $23.6 million due to contribution from the Melbourne’s Ventura Bus operation acquired in June 2024. Ventura reported on track EBITDA performance. 

Ixom delivered better performance from chemicals distribution with Bitumen volume growth. 

Reported net gearing increased

Net gearing increased to 40.8% from 40.4% as of end-2024. 

However, if we include the proceeds from the sale of PCSPC, received in early April 2025, net gearing improved to 38.0%. 

Interest coverage ratio was stable at 6.8x, compared with 7.0x as of end-2024. KIT has refinanced all the debts due in 2025. 

For 2026, the bulk of the maturity is Ixom’s 3-year tranche $525 million. 

Management is confident of meeting the refinancing needs for 2026 due to its financial flexibility including total undrawn committed facilities of $498 million as of 1Q25. 

Management expects distributable income to improve in coming quarters

Management of KIT partly attributed the lower underlying distributable income in 1Q25 to one-offs items, and expects distributable income operations to improve in the remaining of 2025 with positive contribution from newly acquired businesses, including EMK, Ventura and KMEDP. 

Maintain NEUTRAL

With the change in its portfolio mix, we raise our weighted average cost of capital (WACC) assumption to 10%, and our target price falls to S$0.44 (from S$0.48). 

KIT remains committed to its fixed distribution per unit (DPU) policy despite the fall in underlying distributable income in 1Q25. 

Based on its DPU of 3.9 cents in 2024, KIT offers a distribution yield of 9.4%.  
 

Related links:

• Keppel Infrastructure Trust share price and share price target
• Keppel Infrastructure Trust dividend history and forecast

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