Results Snapshot
Comment on Results
Kepland’s FY07 results were in line with expectations. Revenue grew by 48.5% from S$948m to S$1,407.9m and net profit rose by 289.2% y-o-y to S$779.7m for FY07. Dividend of 20 cents was declared for FY07.
Healthy revenue and bottomline growth were mainly attributed to contributions from newly launched projects in FY07 including Six Avenue Residences and China projects Villa Riviera and The Arcadia, as well as existing projects. Associates income rose on maiden sales of Reflections at
Keppel Bay and Marina Bay Residences. Net profit was further boosted by S$235m surplus from ORQ transaction and S$334m revaluation gains of the office portfolio.
Post asset divestment and revaluation, net gearing improved to 0.41x, enabling KepLand to undertake large-scale developments in the future.
Recommendation
We expect Kepland to continue its focus on capital recycling with:
i) Strategic unlocking of capital from asset divestments eg. Capital Square, KREIT initial portfolio as well as recently 1/3 stake in ORQ; ii) Focus on strategic property development, eg. active land acquisitions in Vietnam, niche new township projects; iii) Growth of the property fund management business, eg. MBFC 1/II, redevelopment of Ocean Building.
However, potential unlocking of value arising from asset injections to K-REIT remain long-term catalysts as the completion are expected post FY2010. Therefore we expect KepLand to utilize
the debt headroom for development of these assets in the next few years. Key risks include i) efficiency of equity raisings by K-REIT to fund asset injections ii) stage of the Singapore office cycle.
Maintain Buy and target price adjusted to S$8.55 with fair value pegged at parity to RNAV.
Comment on Results
Kepland’s FY07 results were in line with expectations. Revenue grew by 48.5% from S$948m to S$1,407.9m and net profit rose by 289.2% y-o-y to S$779.7m for FY07. Dividend of 20 cents was declared for FY07.
Healthy revenue and bottomline growth were mainly attributed to contributions from newly launched projects in FY07 including Six Avenue Residences and China projects Villa Riviera and The Arcadia, as well as existing projects. Associates income rose on maiden sales of Reflections at
Keppel Bay and Marina Bay Residences. Net profit was further boosted by S$235m surplus from ORQ transaction and S$334m revaluation gains of the office portfolio.
Post asset divestment and revaluation, net gearing improved to 0.41x, enabling KepLand to undertake large-scale developments in the future.
Recommendation
We expect Kepland to continue its focus on capital recycling with:
i) Strategic unlocking of capital from asset divestments eg. Capital Square, KREIT initial portfolio as well as recently 1/3 stake in ORQ; ii) Focus on strategic property development, eg. active land acquisitions in Vietnam, niche new township projects; iii) Growth of the property fund management business, eg. MBFC 1/II, redevelopment of Ocean Building.
However, potential unlocking of value arising from asset injections to K-REIT remain long-term catalysts as the completion are expected post FY2010. Therefore we expect KepLand to utilize
the debt headroom for development of these assets in the next few years. Key risks include i) efficiency of equity raisings by K-REIT to fund asset injections ii) stage of the Singapore office cycle.
Maintain Buy and target price adjusted to S$8.55 with fair value pegged at parity to RNAV.
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