A strong quarter on higher earnings recognition. Keppel Land delivered a 62.2% YoY jump in earnings to S$311.1mil for 9MFY12. In 3Q, property trading segment was particularly strong (up 53.5% QoQ) due to higher earnings recognition from Re'ections at Keppel Bay and Marina Bay Suites. Completed phases at The Springdale in Shanghai, The Botanica in Chengdu and Central Park City in Wuxi in China also contributed to earnings recognition. 9MFY12 earnings met ~70% of our FY12F estimates (exclude corporate restructuring surplus) and ~79% of consensus estimates. 

Sales rate in line with our expectations.  In 3Q2012, Keppel Land sold 14 and 20 units of the luxurious Marina Bay Suites and Re'ections at Keppel Bay respectively. The Luxurie, a mass'market project at Compassvale, garnered 95 units of sale in the same period. Over 50% of total sales in 3QFY12 were sold in September. As at end Sep, sales rates were ~80% and above, in line with our estimates. On the other hand, Keppel Land sold 290 units in 3Q in China mainly from The Springdale, Central Park City and The Botanica. We expect the slew of property launches in China over 2013'2014 to be one of the earnings drivers. 

Upcoming residential developments'Won top bid for site at New Upper Changi Road, Singapore and acquired site in Chengdu. Keppel Land won the top bid for a site at new Upper Changi Road, at S$791psf for total GFA of 549,082sf. Taking a leaf from Far East's bid on Bedok South Ave 3 in Feb 2012 at S$534psf, Keppel Land's bid price borders on the high side, being 48% higher. On the other hand, Keppel Land acquired a site (2.6mil sf) in Chengdu, China'the 5th residential site next to existing project Hill Crest Villa. Land cost was RMB260psf, for a development of 573 landed homes.

Maintain Hold, FV of S$3.80/share.  Our RNAV estimate stands at S$3.80/share. Pricing it at parity, we obtain a fair value of S$3.80/share. Considering Keppel Land's price gain of more than 45% YTD, we believe most of the positives have been priced in. We maintain our HOLD rating.

Source: AmFraser