Singapore Companies
Published January 26, 2007

KepLand's Q4 profit jumps 46.2% to $81.2m


KEPPEL Land yesterday posted a 46.2 per cent increase in Q4 net profit to $81.2 million and a 28.6 per cent rise in full-year net profit to $200.3 million.

The group expects profit growth to continue in 2007.

KepLand credited the improved full-year showing partly to a 34.7 per cent jump in net profit from property trading on the back of contributions from development projects in Singapore, China, India and Vietnam, as well as gains from the sale of a Tianjin subsidiary of its listed China unit, Evergro, and of Singapore Suzhou Industrial Holdings.

Also contributing to the improved bottom line were gains from the sale of the group's stakes in Hotel InterContinental Singapore at Bugis Junction, and of Ocean Towers in Shanghai, although these were partly offset by provisions for impairment in value of the group's hotels in Myanmar and Indonesia, and Dragon Land Building.

Overseas earnings accounted for 63.6 per cent of net earnings last year, up from 59 per cent in 2005, 43 per cent in 2004 and 32 per cent in 2003. In Singapore, the group sold over 1,200 homes last year, while abroad, it sold about 2,500 homes, mostly in China, India and Vietnam.

KepLand managing director Kevin Wong said 2007 'should still be a good year' for the Singapore residential market. 'Rising sales and prices for the luxury segment are expected to continue in 2007 with demand filtering to the mid-tier market.'

He predicts strong demand and rental increases will continue in the office market for the next few years. Strong fundamentals will further boost the Asian residential market.

Residential projects that the group will launch this year include Reflections at Keppel Bay, Park Infinia at Wee Nam, The Tresor, and the redevelopment of Naga Court. Overseas, it will launch several new projects this year, including Elita Horizon in Bangalore and a condo in Kolkata, India; two villa developments in Shanghai and Tianjin, China; and the first phase of the group's townships in Wuxi, Ho Chi Minh City and East Jakarta.

The group's unlisted fund management vehicle, Alpha Investment Partners, is working to launch two new funds this year.

KepLand's sales for Q4 ended Dec 31, 2006 rose 85 per cent to $341.9 million, while full-year sales increased 61.7 per cent to $948 million.

Full-year earnings per share rose to 27.9 cents from 21.8 cents. Net tangible assets per share fell to $2.21 from $2.35 following a distribution-in-specie (of units in K-Reit Asia) to shareholders. Return on equity jumped to an all-time high of 12.8 per cent from 9.5 per cent.

Shareholders will receive a one-tier final dividend of six cents, up from five cents previously.

Mr Wong also said that KepLand and its fellow partners in the consortium developing the Marina Bay Financial Centre are seriously looking into making a decision soon on exercising the option to buy the next phase of land.

He said that KepLand would selectively re-stock its Singapore residential land bank. It will probably look at the mid-market to strike a balance, given its already substantial land bank in the high-end segment. 'The mid market has not appreciated as much as the luxury market and hopefully that will give us more room (to play).'

Mr Wong said that most developers can absorb an increase in construction costs resulting from the ban on sand exports by Indonesia even if they have not yet awarded construction contracts, as sand forms a relatively small component of the overall project development cost.