Keppel Land

Keppel Land: 1Q14 net profit missed and fell 9.2% y/y to $87.7m while revenue climbed 37.6% to $284.9m, mainly due to increased property trading revenue, with new revenue sources from The Springdale and Phases 4 and 5 of 8 Park Avenue in Shanghai, and higher revenue from Seasons Park at Tianjin Eco-City and Phase 1 of The Estella in HCMC. S’pore residential sales was soft, with only 54 units sold in 1Q14 (4Q13: 60) mainly from The Glades in Tanah Merah. Profit from property trading declined 37.4% due to last year’s completion of The Botanica Phase 6 and Marina Bay Suites, but was partly offset b KREIT, MBFC T3, and fund management segment. CS expects multiple launch projects to complete between 2Q and 4Q this year (e.g. The Botanica Phase 7, Avenue Heights Phase 1, Stamford City Phase 3, etc) Bottomline was weighed by $24.2m of tax expenses contrasting a tax writeback of $4.7m in the corresponding quarter last year. NAV at end Mar was $4.58. Gearing has inched up to 40% (1Q13: 31%). CS likes KepLand’s increasing focus on growing recurring income but highlight policy risks on residential properties in CH and SG remains key concern. CS believes the MBFC Phase 2 sale catalyst has been priced in. Latest broker ratings: Credit Suisse maintains Neutral with TP $3.80 Deutsche maintains Buy with TP $4.00