Keppel Land

Keppel Land: Turned in FY13 and 4Q13 net profits of $885.9m (+6%) and $567.3m (+8% y/y) on record revenues of $1.5b (+6%) and $505.7m (+7%). Excluding fair value gains of $331.1m (-11%), FY13 and 4Q13 earnings of $583.7m (+22%) and $265.1m thrashed street estimates. This was driven by mainly by its China projects (8 Park Avenue, The Botanica The Springdale), property investments (MBFC Tower 3, Keppel REIT) and sale of stakes in Jakarta Garden City and Hotel Sedona Manado, which yielded divestment gains of $151.8m. Overseas profits rose 64% to $141.1m and contributed 33% to the core bottomline.. MKE thinks that the value drivers remain intact, and expects Keppel Land continue focus in China, where MKE thinks demand from upgraders and first-timers can be sustained. That said, Management still expects a “soft landing” for Singapore residential and will be more selective on land acquisitions. The Tiong Bahru site is expected to be launched in 1H14. On MBFC Tower 3, pre-commitment has reached 95% but there are no firm plans to sell the asset, although it might be in the cards if a good offer is received. If the sale does go through however, StanChart expects a potential divestment gain of $350m, which translates to 17¢/share dividend, given Keppel Land’s commitment of a one-third payout ratio. Net asset value at the end of Dec was $4.52. Final dividend of 13₵ proposed, which translates to a 4% yield. Latest broker ratings as follows: OCBC: Maintain Buy with TP: $4.09 MKE: Maintain Buy with TP: $4.60 CS: Maintain Neutral with reduced TP of $3.80 from $4.24 Deutsche: Maintain buy with increased TP of $4.00, from $3.99 StanChart: Maintain O/PF with TP: $4.14 UOB Kay Hian: Maintain Buy with TP: $4.30