Keppel Land: UBS Maintains its Buy Call with $5.08 TP. Note that Keppel Land has underperformed the market at -14% YTD versus -9% for developers and -2.7% for STI, despite being a top performer in 2010 and house thinks that the sell-down reflects investors locking in gains as funds flow out of Asia and the recent Dong devaluation….
Note that at current share price, portfolio office value is at $2400psf and a 35% cut in residential portfolio values The share price implies OFC and MBFC P2 at S$2,400psf (as per recent transactions), representing a 35% discount to SG and China residential portfolio values….
House tip that the discount is overly conservative, as in residential, grp has few SG projects while in China, the mid/mass segment that it targets does not warrant the steep haircut. In office, house believes that there is scope for capital values to rise to $2,750psf target by yr end
(from S$2,400psf) on upbeat buyer sentiment and rental growth.
Believe that the selling has overshot on the downside and believe current levels offer good positioning for normalisation of the ‘risk-on/risk-off’ market environment. TP is based on 0.95x RNAV.
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