What is the news?

Keppel Land reported a credible set of 4Q12 results in a challenging year. Turnover came in at $471.9mn, 26% y-y higher due to higher sales recognized from China projects. Contribution from assoc co. improved 6% y-y to $98mn in the quarter. PATMI was lower by 55% to $527.6mn due to absence of gain from the disposal of OFC as well as lower revaluation gain as compared to 4Q11. For the whole FY12, net profit would have been 61.4% y-y higher if the divestment and reval gains were excluded. The management proposed a final dividend of 12 S cents, higher than our expectation of 8 S cents.

How do we view this?

Overall results met our expectations with adj PATMI exceeding our estimate by 7%. China residential sales were notably improved in 4Q12 but we believe the optimism has been priced in at the current share price.

Investment Actions?

We factor in the higher valuations for its investment properties and K-REIT, and raise the RNAV from $5.05 to $5.30. We also lower the discount to RNAV from 35% to 20% following the improvement in China residential property market, and increase our target price to $4.24. Maintain Neutral. Upside catalyst will come from stronger than expected residential sales in China and Singapore.

Source: PhillipCapital Research - 25 Jan 2013