A Note On Keppel Ltd.'s (SGX:BN4) ROE and Debt To Equity

Keppel Ltd. (SGX:BN4), a Singapore-based multinational corporation, has been a prominent player in the global market for decades. Its return on equity (ROE) and debt-to-equity ratio are crucial metrics for investors to analyze the company's financial health and performance. This article delves into Keppel's ROE and debt-to-equity ratio, their historical trends, and the factors influencing these metrics.

Keppel's ROE has fluctuated over the past five years, with a notable decline in 2020 due to the COVID-19 pandemic. In 2021, ROE rebounded to 6.84%, driven by a strong performance in its infrastructure and connectivity segments. The company's ROE is influenced by its operating margins and asset turnover. Despite the recent improvement, Keppel's ROE remains below its historical average, indicating potential for further growth.


Keppel Ltd.'s current debt-to-equity ratio is 1.06, indicating that the company has more debt than equity on its balance sheet. This ratio is higher than the industry average of 0.58 and the historical average of 0.75 for Keppel. The high debt-to-equity ratio suggests that Keppel has a relatively high level of leverage, which could increase its risk profile. However, it is essential to consider other financial metrics and the company's overall financial health before making investment decisions.


Keppel Ltd.'s interest coverage ratio, which measures its ability to meet its interest payments, has shown a consistent decline over the past five years. In 2019, the ratio stood at 3.22, indicating a strong capacity to service its debt. However, by 2023, this ratio had dropped to 1.99, suggesting a decrease in Keppel's ability to meet its interest obligations. This trend may be attributed to the company's increasing debt levels, which have risen from SGD 8.47 billion in 2019 to SGD 11.91 billion in 2023. Despite this decline, Keppel's interest coverage ratio remains above 1, indicating that it can still meet its interest payments. However, investors should monitor this ratio closely, as a sustained decline could signal potential financial distress.

In conclusion, Keppel Ltd.'s ROE and debt-to-equity ratio are important metrics for investors to consider when evaluating the company's financial health and performance. While Keppel's ROE has shown improvement, it remains below its historical average, indicating potential for further growth. The company's high debt-to-equity ratio suggests a relatively high level of leverage, which could increase its risk profile. However, investors should consider other financial metrics and the company's overall financial health before making investment decisions. Keppel's interest coverage ratio has shown a consistent decline over the past five years, which investors should monitor closely to assess the company's ability to meet its interest obligations.