Continue reading this on our app for a better experience

Open in App
Home Capital Broker's Calls

Keppel kept at ‘buy’ with eyes on China home sales

PC Lee
PC Lee • 2 min read
Keppel kept at ‘buy’ with eyes on China home sales
SINGAPORE (Dec 8): UOB KayHian is maintaining its “buy” call on Keppel given the rebound in the local property market, steady home sales in China and a doubling of Keppel Capital’s AUM to $50 billion.
Font Resizer
Share to Whatsapp
Share to Facebook
Share to LinkedIn
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

SINGAPORE (Dec 8): UOB KayHian is maintaining its “buy” call on Keppel given the rebound in the local property market, steady home sales in China and a doubling of Keppel Capital’s AUM to $50 billion.

In a Thursday report, analyst Foo Zhi Wei says Keppel’s earnings in 2018-19 will largely driven by property sales in China.

These will largely come from its Tianjin Eco City project followed closely by its Wuxi projects.

Meantime, earnings from Singapore will mainly be driven by sales of its Corals at Keppel Bay project while Vietnam has a 5-13% earnings contribution at best.

Although China’s property cooling measures implemented earlier this year caused a 48% y-o-y fall in home sales in 3Q17, Foo says Keppel’s projects still retain pricing power, with prices remaining flat and sales continuing at a steady clip.

Furthermore, if Keppel decides to divest more projects in non-core cities in China -- similar to the Keppel Cove Zhongshan transaction -- Foo says UOB’s undiscounted property RNAV could rise by another 15 cents or 2.2%.

See also: Beansprout initiates ‘buy’ call on KIT with TP of 59 cents

In fact, UOB’s review of Keppel’s overall property RNAV sees it rise from $4.85 to $5.66/share on the incorporation of development surpluses from Keppel’s investment properties under development, an increase in development surpluses from its properties and a revaluing of its Keppel REIT stake to UOB’s $1.43 target.

“We have shifted our valuation to 2019. Incorporating the higher RNAV, adjustments to our O&M valuation and Keppel KBS REIT will see our SOTP-based target price rise to $8.98,” says Foo.

As at 10.55am, shares in Keppel are up 11 cents at $7.60 or 15.2 times FY18 earnings.

×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
© 2024 The Edge Publishing Pte Ltd. All rights reserved.