Keppel Land

Keppel Land ($3.180): had a disappointing 3Q14 as net profit declined 10.6% y/y to $113m alongside a 59.6% plunge in sales to $168.7m and higher minority interests. Profit contribution from property trading collapsed 64.8% y/y to $31.6m as sales at new launches almost completely stalled with the general slowdown in Singapore and China property market. Only 11 sales transactions were made in KPLD’s latest Singapore TOP, Lakeshore Residences, and overseas projects also underperformed. In other segments, earnings from fund management declined 9.6% y/y to $15.1m, from hotels and resorts plunged 94.3% y/y to $0.3m on lower occupancies, higher operating costs and absence of divestment gains. The only bright spot was property investment, which improved 77.6% y/y to $71.0m on divestment gains of Equity Plaza and share of Keppel REIT’s divestment gains of Prudential Tower. Stripping the two one-off divestment gains that amount to $66.7m, 3Q14 net profit was a dismal $42.3m, down 63.4% y/y. For 9MFY14, earnings were down 3.3% y/y to $308m and EPS declined 3.4% y/y to 19.9cents, making exactly 75% of full year Bloomberg EPS earnings. BVPS rose 1.5% from Dec13 to 4.59cents. Going forward, the group plans to continue its efforts to recycle capital to scale up its commercial portfolio overseas. Related to this, KPLD also announced yesterday it divested 51% stake in condominium project in Saudi Arabia for $185.1m, fully satisfied in cash, representing net gains of $68.4m from its initial investment. KPLD currently has 15 Buys , 5 Holds, 3 Sells.