Keppel Land

Keppel Land: plans to acquire 2 sites in Spore and Chengdu China for $568m in total. In Spore, KPLD submitted the top bid of $435m ($791 psf vs mkt expectations of $550-700 psf) for a residential site located on New Upper Changi Road opposite the Tanah Merah MRT. The site has a GFA of 549k sf and is est to yield ~700 units. The bid was 7% above the next highest offer by Fragrance Group, and 17% above the price paid by the Fragrance Group JV for a nearby site in July. There was strong interest in the site, with 11 bidders in total, and all major developers taking part. The acq in Spore represents KPLD’s first major domestic land bank restocking since Mar ’11 when it acquired its Luxurie site in Sengkang. Recall KPLD’s domestic land bank has fallen to ~1m sf. Deutsche estimates breakeven cost is $1190 psf, and an ASP of ~$1325 spf, implying a margin of 10.4%. Estimates the project will contribute ~4cts to NAV. KPLD also acq its 5th land parcel in Chengdu, a 28.7ha site for Rmb 680.4m (~S$133m). The site is located in the residential enclave of Mumashan, 20km away from the city cetnre and 19km from Shang Liu Int’l Airport. It is est to yield 573 landed homes and is adj to its other Hill Crest Villa site. Deutsche est total devt cost of Rmb 11,190psm, and ASP of Rmb 16,000 psm, implying est gross margins of ~32%. Estimates thet project will contribute 9 cts to NAV. Deutsche maintains Buy with TP $3.81. Citi maintains Sell with TP 3.38.