Bond Articles

Keppel Infrastructure Trust: Pandemic-Proof

Timothy Ang  |   01 Jun 2021  |    302 views

Keppel Infrastructure Trust (KIT) is the largest infrastructure-focused Singapore business trust. As at 31 March 2021, KIT’s portfolio was S$5.1bn of AUM in energy, distribution & network, and water- and waste-related infrastructure in Singapore, Australia, New Zealand and the Philippines.


Strong predictable cash flows from KIT’s utility assets and stakeholder Temasek (32% stake) bode well for bondholders. KIT’s performance was unaffected by the pandemic, with FY20 EBITDA growing 17.4% YoY and free cash flow to equity by 19.6% YoY.

Portfolio (S$5.1bn, 46.7% in Singapoe, 53.3% in other countries)

  • Senoko and Tuas WTE Plants, Ulu Pandan NEWater Plant and SingSpring Desalination Plant: Singapore; Waste and water; 8.1% of AUM
  • Keppel Merlimau Cogen (KMC): Singapore; Energy; 14.6% of AUM
  • Ixom: Australia & New Zealand; Distribution and network; 25.4% of AUM
  • Philippine Coastal: Philippine; Distribution and network; 3.9% of AUM
  • Basslink: Australia; Distribution and network; 17.4% of AUM
  • City Gas: Singapore; Distribution and network; 11.9% of AUM
  • Trust assets and non-controlling interest: 18.7% of AUM

Metrics (As at 31 March 2021)

  • Market cap (as at 1 June 2021): S$2.7bn
  • Net gearing: 37.3%
  • Net debt to EBITDA: 4.8x
  • Stakeholder: Temasek 32%


+ Utilities are essential services. KIT’s operations were not affected during the pandemic.

+ Government and blue-chip customers. All of KIT’s waste and water plants (8.1% of AUM) are contracted to government entities in Singapore; the National Environment Agency or the Public Utilities Board. KIT’s Keppel Merlimau Cogen power plant (14.6% of AUM) is contracted to Keppel Electric, a blue-chip government-linked company. Ixom, a water treatment chemical plant in Australia and New Zealand, sells to over 8,000 customers comprising municipals and blue-chip companies. Philippine Coastal, the largest petroleum product storage facility in Philippines, serves blue-chip customers. City Gas, the sole producer and retailers or piped town gas in Singapore, is the only plant that serves smaller customers, numbering over 860k of commercial and residential users.

+ Highly predictable cash flows. KIT’s utility assets charge customers in a fixed manner. For waste and water plants, they receive fixed payments for capacity and not for usage. Energy plants receive fixed payments on a availability target basis, not usage. City Gas earns a fixed margin per unit of gas sold, and is unaffected by fuel and electricity cost fluctuations. Philippine Coastal takes contracts on “take-or-pay” terms, removing exposure to petroleum price and volume risk.


– Concessions with governments may expire. KIT’s use of the waste and water plants (8.1% of AUM) are based on government concessions. These have expiries ranging from 2024 to 2034. The KMC energy plant has a capacity tolling agreement until 2030 with option for 10y extension and a land lease expiring on 2035 with 30y extension option. KIT is exploring acquisitions to bolster its cash flows for the long term; the latest being Philippine Coastal, the largest petroleum products storage facility in Philippines, for S$357mn.


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