Keppel Land

Keppel Land: Keppel Land’s 4Q14 results came below estimates, mainly due to lower-than-expected overall margins and sales in China, as net profit fell 21.6% y/y to $444.5m, dragged by 34% fall in fair value gain on investment properties, while revenue improved 39.5% to $705.4m. The strong top line was mainly driven by property trading of $645.4m (+44%), buoyed by the divestment of Al Mada Towers in Jeddah, as well as new contribution from Phase 1 of Seasons Residence in Shanghai and Phase 1 of Park Avenue Heights in Chengdu. This was partially offset by the absence of revenue from The Lakefront Residences in Singapore and The Springdale in Shanghai. The group’s other segments improved 3.2% overall, contributed by fund management (+50%) and hotels and resorts (+11%), but weighed by property investment (-39%) and others (-25%). This brought FY14 net profit to $752.5m (-15%), on revenue of $1,497.2m (+2.5%). Excluding fair value gains, group’s core earnings fell 5.4% to $552m. Management cited that 2015 is likely to be another challenging year as the economic conditions in its core markets (S'pore & China) are not expected to improve significantly. Meanwhile, group will maintain its focus in its two growth markets- Indonesia and Vietnam, where demand has proved to be strong, supported by urbanisation and improving sentiments. Group also declared a final dividend of 14¢, slightly ahead of forecast, which translates to 3.8%. However, street’s expectation of a special dividend following the $1b divestment of several office towers in Singapore was shattered. Still, based on the last closing price of $3.65, Keppel land is valued at an attractive 26% discount to NAV and 33% discount to consensus RNAV of $5.48.