Keppel's Deep Value Hidden as Market Still Sees O&M Past

Keppel's Shift from O&M Giant to Global Asset Manager

Keppel Corporation's identity was once inseparable from offshore and marine (O&M) engineering. As recently as 2015, that cyclical segment delivered 60% of group revenue, tying earnings to the volatile oil and gas cycle. The company's price-to-earnings multiple reflected that: between 2015 and 2023 it averaged just 6.1x, swinging wildly between 2.8x and 28x.

That legacy ended when Keppel effectively sold its O&M business to Sembcorp Marine, which later became Seatrium, and pivoted toward three core segments: infrastructure, real estate and connectivity. By 2025, the old O&M assets had been bundled into a non-core portfolio contributing only 12% of total revenue. Yet the company's financial reports now tell a different story. Stripping out non-core operations, Keppel generated S$941 million in recurring income and S$1.1 billion in net profit for 2025. Funds under management (FUM) reached S$95 billion, with asset management fees of S$453 million—both compounding at around 20% annually over five years.

Management's Vision 2030 strategy targets S$200 billion in FUM and a return on equity “significantly above 15%” from its asset-light model. Since October 2020, Keppel has announced S$14.5 billion in asset monetisations—nearly three-quarters of its current market capitalisation—and intends to unlock a further S$13.5 billion from non-core assets over the next five years. The dividend was lifted 38% in 2025, matching the 39% rise in adjusted net profit.

Despite this pivot, Keppel's shares traded at a price-to-earnings ratio of 19.5x as of late July 2026, well below Seatrium's 24.4x and barely half the 33.7x multiple carried by Brookfield Asset Management, a North American peer with a comparable mix of infrastructure, renewables and real estate. The market appears to be pricing Keppel as if its oilfield past still dominates, even as recurring fee income and digital infrastructure bets reshape its future.

Why the Market Still Values Keppel Like an Offshore Firm

The Discount to Global Peers

Keppel's 19.5x P/E remains anchored to a conglomerate that no longer exists. Seatrium, the entity that absorbed the O&M operations, now commands a higher multiple despite carrying far more direct exposure to offshore cycles. Brookfield's 33.7x multiple partly reflects a deeper institutional following and a longer track record as a pure asset manager, but Keppel's FUM growth rate and burgeoning asset management fees suggest the discount may be more about perception than fundamentals. If the company continues compounding FUM at 20% and delivers on its asset-light ROE target, a convergence toward the multiples of recognised infrastructure asset managers is plausible.

Execution Risks and the M1 Setback

The transformation is not without hazards. The attempted sale of mobile unit M1 to Simba was suspended by the regulator over potential compliance breaches at the buyer, and Keppel's shares fell 3.5% in the two days after the news. Although the setback was not of Keppel's making, it highlights the regulatory risk embedded in the connectivity piece of the pivot. Meanwhile, the company's building of data centres and clean energy infrastructure is yoked to AI-driven demand; a cooling of the AI investment cycle or rising interest rates could slow project financing and fundraising, directly curbing the fee growth that underpins the new valuation story.

The Asset-Light Prize

Keppel's ability to churn assets—monetising mature ones to fund new, higher-return projects—is central to its thesis. The S$14.5 billion already announced in divestments provides a tangible track record, and the plan to unlock another S$13.5 billion from the non-core portfolio over the next five years could both return capital to shareholders and highlight the embedded worth of the balance sheet. As asset management fees become a larger share of earnings, the profit stream stands to become more resilient, less capital-intensive, and more likely to attract a valuation re-rating. For now, however, the market's memory of O&M cycles is proving sticky, leaving a gap between the business Keppel has built and the price it fetches.

What Investors Should Watch in Keppel's Next Chapter

• Look beyond headline P/E. Compare Keppel's recurring, asset-light income and FUM growth trajectory with those of pure infrastructure managers—not industrial conglomerates—when assessing valuation.
• Monitor asset monetisation milestones. Management's roadmap includes S$13.5 billion in further non-core divestments; each completed sale validates the hidden value on Keppel's balance sheet and could catalyse a share price response.
• Watch the M1 transaction resolution. The suspended sale to Simba represents a near-term regulatory flashpoint. Clarification from authorities or an alternative deal structure would remove uncertainty around the connectivity segment.
• Track data-centre and clean-energy spending signals. Keppel's growth is tied to digital infrastructure build-out; any sharp downturn in AI capex or a sustained rise in interest rates would hit the fee income and project pipeline that support the investment thesis.
• Weight dividend growth as a confidence indicator. The 38% dividend increase in 2025 mirrors the step-up in adjusted profit and signals management's conviction in the sustainability of the new earnings profile.