Keppel Land (K17.SG) opens +2.0% at $4.66 after it reports an eight-fold on-year increase in 4Q net profit to $841 million, mainly due to a $363.8 million divestment gain from its stake in Marina Bay Financial Centre Phase 1 and fair value gains of $442.7 million from investment properties.

OCBC, which has its previous Buy rating and $4.50 fair value under review, says the FY10 results were positive, notwithstanding the bumper gains. 

 

It notes KPLD’s cash position surged from US$0.9 billion ($1.15 billion) in FY09 to US$1.6 billion for FY10 while net gearing remained at a relatively low 20%. 

 

“This balance sheet strength is a significant advantage as it gives KPLD flexibility to navigate an uncertain market and capitalize on attractive opportunities.” 

 

It adds “given the current policy overhang and uncertainty in its main markets, we like that KPLD has significant exposure to the recovering office sector in Singapore, a strong balance sheet and a clear strategy of seeking projects offering good risk-adjusted returns.” 

 

$4.70 may be a near-term cap.