Keppel Land

Keppel Land: Hosted a site visit for analysts in Shanghai. Since Keppel Land China was formed in 2010, China has grown from 20% of assets (or $1.7b) to 44% ($5.8b). The co has made $2.1b of acquisitions since then, largely focused on the key markets of Beijing ($0.2b), Shanghai $0.8b), Chengdu ($0.5b), Wuxi ($0.45b) and Tianjin ($0.05b). The land bank has grown to 5.6m sqm or 40k units. Credit Suisse believes there will be more collaborations between KPLD and China Vanke after their strategic alliance signed in Apr. Meanwhile, ideally, trading profits should make up 70-80% of China's profits, with preference for Tier1/2 cities as they can differentiate themselves as foreign developers and are able to tap into existing relationships, with lower risk of oversupply, given urbanisation. Management also plans to grow its commercial division to provide some recurring income. KPLD has sold 3,600 units (YTD to mid-Nov 2013) vs. 1,650 units in FY12. End-user focused projects such as Springdale (96% of 611 units sold YTD), Stamford City in Jiangyin (73% of 416), and Botanica in Chengdu underpinned volumes. ASPs have firmed y-o-y, with modest sub 5-10% price increases. Achieved selling prices and volumes are consistent with market estimates. Deutsche maintains Buy with TP $4.27. Credit Suisse maintains Neutral with TP $4.24 BNP maintains Hold with TP $3.92