Property trading main driver — Attributable profit for the property trading segment fell 35% yoy due to completion of several projects last year – namely The Seasons in China, Villa Riviera in Vietnam and Park Infinia at Wee Nam in Singapore. Despite the fall, property trading was still the main driver of net income, contributing some 86%. Both property investment and fund management segments managed improvements both on a yoy and qoq basis.
Income from associates — Recognition of profit from Marina Bay Residences and Reflections led to the higher profits from associates. Keppel Land guided that it had recognized $15.6m for the fully sold Marina Bay Residences (48.4% completed) but only $3.7m for the 55%-sold Reflections(22.6% completed) in 1Q09 alone. We expect progressive contribution from both projects over the next 9 months.
Maintain Buy (1L), TP $2.23 — While we remain negative on the office sector, we see value in Keppel Land. The stock is trading at a 44% discount to our 09E RNAV of $3.19 and 1.5 standard deviations from its mean on a 6-month forward basis. Even during the 2003-2004 period when both residential and office sectors were depressed, the stock reverted back to its mean valuation of a 16% discount. Maintain Buy.
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