Keppel Land

Keppel Land: 3Q12 results broadly in-line, although bottom-line was boosted by associates and divestment gains. Rev at $166.4m, +49% yoy and +28% qoq, while net profit at $74.5m, +28.5 % yoy and -21.3% qoq. However excluding divestment gain of $16.7m for the Saigon Center, core net profit would have been $57.8m. Gross margin at 27.8% vs 58.5% yoy. Result brings 9M12 rev to $466.9m, -18.6% yoy and net profit to $311.1m, +62.2% yoy. Performance was led by higher rev reported by the Ppty Trading segment ($62m) Fund Mgt segment ($2m) and Hotels and Resorts segment ($1.8m), partly offset by lower rev from the Ppty Investment segment ($7.7m) and Others segment ($3.4m) The Group’s overseas rev for 3Q12 constituted 55.1% of total rev vs 33.9%, attributable primarily to higher rev recognition from The Seasons in Shenyang and Riviera Cove in Ho Chi Minh City (HCMC). 3Q domestic sales trends remain muted as the co sold 123 units in 3Q vs 103 in 2Q, owing to additional sales at the Luxurie (78% of 622 units sold) At pre-tax level, the Group’s profit grew by $27.3m, +41.7% yoy a result of the strong performance of Grp’s associates, mainly Marina Bay Suites and Keppel REIT. Grp’s performance in 3Q12 was also boosted by the non-recurring gain of $16.7m from the divestment of 22.7% effective interest in Saigon Centre Phase 2. Going forward, Deutsche expect a stronger 4Q with the co yet to recognize profits on 2 projects completing this year in China, and an additional 3 in Thailand and India. Investment property earnings continue to strengthen on higher contributions from K-REIT, while fund management continued to strengthen from rising AUM. At current price, grp trades at 0.95x P/B, and at 0.72x P/RNAV. Ratings as follow: Deutsche maintains Buy with $3.81 TP CS maintains neutral with $3.72 TP Maybank KE maintains Buy with $4.10 TP Morgan Stanley maintains Equal Weight.