Wednesday 23 October 2013

Keppel Land

OCBC on 17 Oct 2013

KPLD’s 3Q13 PATMI increased 70% YoY to S$126.4m mostly due to higher profits from the property development segment and a maiden contribution from Corals at Keppel Bay launched in May 13. 9MFY13 PATMI now cumulates to S$318.5m, forming 70% of our FY13 forecast which we judge to be mostly in line. KPLD sold about 310 residential units in Singapore over 9M13 and we expect the group’s condominium project in Tiong Bahru to be launched next year. In China, KPLD sold a fairly impressive 3,070 units in 9M13 which we note is up three times over the 970 units in 9M12. We understand the group completed 1,800 homes in China over 9M13 and will take an opportunistic stance in launching its new projects in the pipeline. Maintain BUY with an unchanged fair value estimate of S$4.09 (30% RNAV disc.).

3Q13 PATMI up 70%
KPLD’s 3Q13 PATMI increased 70% YoY to S$126.4m mostly due to higher profits from the property development segment and a maiden contribution from Corals at Keppel Bay launched in May 13. 9MFY13 PATMI now cumulates to S$318.5m, forming 70% of our FY13 forecast which we judge to be mostly in line. In terms of the topline, 3Q13 revenue came in at S$417.9m, up 151% with progress recognitions from The Lakefront Residences and The Luxurie in Singapore, Seasons Park in Tianjin Eco-City, Jakarta Garden City in Indonesia, The Springdale in Shanghai, and new revenue contributions from Phase 4 and 5 at 9 Park Avenue in Shanghai.

Residential launch at Tiong Bahru site likely in FY14
The group sold about 310 residential units in Singapore over 9M13, mostly from The Glades at Tanah Merah (89 units out of 726 total units sold, S$1,518 psf ASP), Corals at Keppel Bay (158 units out of 366 total units sold, S$2,170 psf ASP) and the Luxurie which is by now fully sold. Looking ahead, we expect the 500-unit condominium development in Tiong Bahru to be launched in FY14. The site was acquired in April earlier in the year for S$550.3m and we estimate breakeven prices and average selling prices of S$1,750 psf and S$1,950 psf, respectively. In China, KPLD sold a fairly impressive 3,070 units in 9M13 which we note is up three times over the 970 units rate over 9M12. We understand the group completed 1,800 homes in China over 9M13 and will take an opportunistic stance in launching its new projects in the pipeline, i.e. Seasons Residences in Shanghai, Hill Crest Villa in Chengdu and Water Residence in Nantong.

Maintain BUY with S$4.09 FV
We continue to like KPLD for its diversified exposure across property segments and geographical markets, and a strong balance sheet with S$900.4m in cash and 44% net gearing. Maintain BUY with a fair value estimate of S$4.09 (30% discount to RNAV).

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