• 4Q13 results in line
• Tiong Bahru launch ahead
• Firm conditions in China

Boost from sales of Indonesian assets

KPLD reported 4Q13 PATMI of S$567.3m, up 7.6% YoY, mostly due to a S$151.8m divestment gain from the sale of Jakarta Garden City and Hotel Sedona Manado, Indonesia, and partially offset by lower fair value gains on investment assets. FY13 PATMI now cumulates to S$885.9m; excluding the effects of one-time items, we judge this to be in line with expectations. In terms of the top line, KPLD booked S$505.7m of revenues in 4Q13. This increased 7.2% YoY as heavier progress recognition rolled in from Lakefront Residences and The Luxurie in Singapore as well as Riviera Cove in Vietnam. The group also proposed a final dividend of 13 S-cents.

Expect Tiong Bahru Site launch in 1H14

The group sold 370 residential units in Singapore over FY13, mostly derived from Corals at Keppel Bay and The Glades, and is down 14%. We expect another muted year in Singapore, given the uncertain residential outlook currently, and the bulk of KPLD’s FY14 sales would likely come from its 500-unit Tiong Bahru project (to be launched in 1H14). MBFC Tower 3 is now 95% committed with an average WALE of eight years. We understand that management is comfortable with conditions in the CBD office market currently, and would be willing to divest and recycle capital when the right offer comes along.

Impressive rate of sales in China

In FY13, the group sold an impressive 3.9k units in China, up 135% over FY12, mostly from The Botanica (Chengdu), The Springdale and Seasons Residence in Shanghai and Stamford City (Jiangyin). Though we note that sales in 4Q13 dipped 30% QoQ to 800 units, management indicated that they continue to see fairly solid housing fundamentals on the ground.

Maintain BUY with unchanged S$4.09 FV

We continue to like KPLD for its compelling valuation and its strong balance sheet with S$1.6b in cash and 22% net gearing. Maintain BUY with an unchanged fair value estimate of S$4.09

Source: OCBC Research - 23 Jan 2014