Tuesday, January 25, 2011

Keppel Land

Keppel Land: Reported a strong FY10 performance with a record net profit $1.05b in 2010, lifted mainly by a $363.8m gain from the sale of Grp’s 1/3 interest in MBFC as well as higher fair value gain on investment properties. Excluding fair value gains, net profit grew to $640.8 million, +145.2%YoY, while rev was at $792m, -14.2%YoY....

Property trading recorded stronger contribution from Reflections at Keppel Bay and Marina Bay Suites in Singapore, together with residential projects in China namely The Arcadia in Tianjin, Villa Riviera and The Springdale in Shanghai as well as Central Park City in Wuxi. In addition, a larger share of profit from K‐REIT Asia as well as higher fee income from fund management due to an enlarged asset under management also contributed to the improved performance....

Grp has announced a distribution of 18c/share, comprising a special dividend of 9c and an ordinary dividend of 9c, bringing FY10 yield to 4.6%. Going forward, grp expects continued growth projected for 2011, with prime office space continuing to attract demand with the growth of Finance and Business services...

We note that grp’s balance sheet remains strong, with more than $1.5b cash and a net debt-equity ratio of 0.2, which will enable grp to grow further with acquisitions in both SG and overseas and trades at 1.5x P/B . Deutsche has buy Call with $5.08 TP, HSBC upgrades to Overweight, with TP of $5.16 (RNAV), while Macquarie and Citi remains neutral on stock with $4.81 and $5.20 TP.

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