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BID FOR KEPPEL LAND

The strong draw of property

Keppel Land lists factors that it says will benefit its portfolio of properties in China, Vietnam and Indonesia

By Lee Meixian

[email protected]@LeeMeixianBT

24 Jan


KEPPEL Land sees several external factors that will benefit its portfolio of properties in China, Vietnam and Indonesia going forward. These are the three main markets outside Singapore it operates in.

It shared this at its postponed results briefing on Friday.

In China, for instance, mortgage relaxation for second-home buyers and lower mortgage rates will improve affordability for home buyers.

In Vietnam, it is expecting relaxation of foreign home ownership, effective this July, to boost demand. In Indonesia, apartments are in good demand given higher landed housing prices and urbanisation, while demand for CBD (central business district) offices is healthy following the presidential election.

Keppel Land is the property arm of Keppel Group. It specialises in commercial and residential properties, with Singapore and China as its two core markets, and Vietnam and Indonesia as growth markets.

Keppel Land organises its business into five segments. The biggest one is property trading. This segment involves the development of homes and townships in Asia, primarily Singapore, China, Indonesia, Vietnam and India. It contributed about S$1.3 billion of its overall sales of S$1.5 billion, although only a quarter of its net profit of S$752 million for FY14.

Its other four segments are: property investment (owning and running commercial properties in Asia); fund management; hotels and resorts (in China, Indonesia and Myanmar); and others - such as corporate and property services.

Keppel Land said it will continue scaling up in its existing markets, while expanding its commercial presence overseas, making strategic investments, and growing its fund management businesses.

Of the 22 research houses that cover Keppel Land, 11 have "buy" calls on it, eight recommend "hold" and three advise "sell". The consensus target price is S$3.73. Keppel Land traded to a one-year high of S$3.65 on Tuesday before its halt.

One of its more interesting recent buys is a 75 per cent stake in retail management company Array Real Estate, which seemed to hint that it will be delving more into the retail property sub-sector. Array builds, runs and leases out space in retail malls. Its senior management team has played key roles in developing and managing malls such as Jurong Point Shopping Centre, Century Square, Tampines One, Hougang Mall, Tiong Bahru Plaza, White Sands, Liang Court, and Taimall in Taiwan.

In Singapore, it has properties with unsold units such as The Glades at Tanah Merah (479 units unsold), Corals at Keppel Bay (179 units) and the recently launched Highline Residences (352 units). The group said it is not looking to cut prices as it has the financial strength to hold them and does not see any sharp correction in the market. Meanwhile, it has set aside around 150 units at Reflections at Keppel Bay for corporate residences.

At its 5pm briefing, management was firm in not commenting on Keppel Corp's privatisation offer, saying it had just learnt of the news only a few hours ago.

But asked when it plans to issue the anticipated special dividend from its recent property divestments, Keppel Land's chief financial officer Lim Kei Hin said that the group no longer classifies dividends as normal or special. Thus, the final dividend of 14 Singapore cents per share announced on Wednesday would already have included any special dividend.