Steady quarter. KepLand reported a 3Q12 PATMI of SGD74.5m. Excluding exceptional gains, core PATMI remained flat YoY at SGD57.8m, which is in line with expectations. 9M12 PATMI stands at SGD311.1m. Just this week, KepLand announced that it will be committing SGD568m in total for a plot of land each in Singapore and Chengdu. We raise our target price to SGD4.10, pegged at a 30% discount to RNAV. Maintain BUY.

Slight improvement in sales. In the quarter, KepLand sold over 120 homes in Singapore, compared with the 190-odd units sold in 1H12. Bulk of the sales were from The Luxurie at Sengkang, where 92 units were sold in 3Q12. In China, KepLand sold ~290 units in the quarter, taking YTD sales there to around 980 units. KepLand is still looking to launch 1,643 homes in China by the end of the year.

Making a bullish statement. On 16 Oct, barely eleven days after the Singapore government introduced the sixth round of cooling measures targeting the residential segment, KepLand put in the top bid of SGD434.6m, or SGD791 psf ppr for a condo site in Tanah Merah. We estimate the breakeven to be SGD1,250 psf - a price which projects nearby are commanding at the moment. The project's ASP is likely to be ~SGD1,400 psf for a thin pre-tax margin of 11% and RNAV accretion would be 4 cents/share.

Acquires fifth site in Chengdu. On the very same day, KepLand also announced that it is acquiring a 28.7 ha site at Mumashan in Chengdu for RMB680m (SGD133m). The site is adjacent to one which the Group already owns and is being developed for 274 landed homes. KepLand intends to build 573 landed homes on the new site and we expect an RNAV accretion of 4 cents/share based on an ASP of RMB15,000 psm.

Beauty in diversification. We continue to favour KepLand's diversified business, which is backed by a strong balance sheet. Maintain BUY, with a higher target price of SGD4.10, suggesting a 19% upside.

Source: Maybank Kim Eng Research - 18 Oct 2012