Keppel Land

Keppel Land: Deutsche maintains Buy with $4.34 TP. House recently met with Keppel Land’s management and discussion focused on management outlook and strategy for its key SG and China markets, as well as thoughts on capital recycling and deployment plans. Management commented that SG residential market has been getting more challenging with cooling measures impacting demand. While prices could soften, there is unlikely to be a sharp correction, with underlying demand supported by owner occupiers. Management stated that it will take a wait-and-see approach on future land tenders and continue to focus on well located sites. Keppel Land remains positive on underlying fundamentals in China, and on the near term outlook with a moderation in new tightening measures. Sales momentum has been steady over the past months, with Botanica, Springdale and 8 Park Avenue continuing to attract healthy demand. The co noted that competition remains strong and will focus on its core markets in order to gain scale and maintain relationships. MBFC Tower 3 is now 90% committed. While the asset is sufficiently stabilised to be divested to Keppel REIT, management is also comfortable to wait as the office rental market is likely to improve over the next 2 years. Mgt will also consider reinvestment opportunities and the impact on earnings from the divestment. Co expects office rents to recover at c.10%/yr. Mgt also stated that it will look to increase its exposure in Jakarta, following the planned divestment of its stake in Jakarta Garden City which would result in a S$186m gain if completed this year.