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Goldman Sachs views Keppel Land’s (K17.SG) $500 million convertible bond issue positively, “as the substantial conversion premium minimizes near-term dilution and will not be an overhang.”
Sees upside potential from new leg of growth after developer has enjoyed near market dominance in Singapore Grade-A office. If fully converted, notes full dilution impact of today’s issue and 2006’s $300 million convertible bond issue would be 8.8%; post issuance, completion of MBFC Phase 1 transaction, net gearing would be 0.5%.
Sees upside potential from new leg of growth after developer has enjoyed near market dominance in Singapore Grade-A office. If fully converted, notes full dilution impact of today’s issue and 2006’s $300 million convertible bond issue would be 8.8%; post issuance, completion of MBFC Phase 1 transaction, net gearing would be 0.5%.
“While KepLand does not have immediate funding needs, we acknowledge its capital readiness to take advantage of investment opportunities at home and abroad, that could potentially lead to better returns.”
Keeps EPS estimates unchanged, NAV-based target price of $3.92, keeps Neutral rating with stock trading at premium to peers at 6% discount to forward NAV vs 18% sector discount.
Shares off 4.0% at $4.85.
