What is the news?

Keppel Land reported 1Q13 results with higher revenue of $207mn (+22%y-y), mainly due to higher sales recognition from The Lakefront Residences and The Luxurie. Contributions from overseas projects were lower, constituted 26% of the 1Q13 revenue (2012: 72%). Share of results of assoc. co. were however lower at $63.4mn due to lower contribution from Reflections at Keppel Bay. As a result, PATMI decreased by 32%y-y to $96.6mn (-32%y-y). The decline in bottom line had also been mitigated by a write-back of tax due to finalization of prior years’ tax.

How do we view this?

Results were in-line with our expectations and we are positive to note that Keppel Land struck an alliance with China’s largest residential developer Vanke. We expect the duo to collaborate in more China development projects in the near future.

Investment Actions?

We maintain our RNAV estimate at $5.30 and fair value at $4.24, based on 20% discount to RNAV. Maintain Neutral. Upside catalysts include potential divestment of MBFC Tower 3 and stronger than expected sales and margin in its Tanah Merah project.

Source: PhillipCapital Research - 19 Apr 2013