Keppel Land Shares Jump on Record Dividend: Singapore Mover
January 22, 2012, 7:56 PM ESTBy Pooja Thakur
Jan. 20 (Bloomberg) -- Keppel Land Ltd., the property developer partly owned by the world’s largest builder of oil rigs, surged to a two-month high after reporting a 47 percent increase in fourth-quarter profit and a record payout.
Net income climbed to S$1.17 billion ($919 million) in the three months ended Dec. 31, from S$796.8 million a year earlier, it said in a stock exchange statement yesterday, boosted by a S$508.1 million gain from the sale of its downtown Singapore office building to its property trust. The Singapore-based developer will also pay a final dividend of 20 cents a share.
The sale will help the developer fund its expansion into commercial real estate projects after governments in Singapore and China, its two biggest markets, imposed further measures to curb speculative home buying. Keppel Land said yesterday it bought a site for a commercial development in Beijing.
“Aware of the challenges in its operating environment, the management guided its strategy to reduce business volatility by diversifying its property businesses outside residential,” Chong Kang Ho, a Singapore-based analyst at BNP Paribas who has a “buy” recommendation on the stock, said in a report yesterday. He added that it’s “in a strong financial position to build up its land bank, especially at reasonable prices in a downturn.”
The stock advanced 5.1 percent to S$2.70 at the close in Singapore, the highest since Nov. 14. The developer was the second-best performer on the FTSE Strait Times Real Estate Index tracking 45 property stocks traded in the city-state today.
Slowing China Sales
Keppel Land said yesterday its China home sales slowed to 1,400 units last year from about 4,100 in 2010 with “sentiments affected by purchase restrictions and other cooling measures.”
China’s December home prices posted their worst performance last year, with only two of the 70 cities tracked posting gains, as the government reiterated its plans to maintain housing curbs. Prices in 52 of 70 cities monitored by the government declined from the previous month, the statistics bureau said this week.
The Chinese government said last month it won’t back away from curbs on the real-estate industry, with the financial center of Shanghai and the capital of Beijing among Chinese cities that have said they will continue to impose restrictions on home purchases this year.
In Singapore, December private home sales dropped to a two- year low of 632 units after the government imposed new taxes on house purchases, according to government data this week. Home prices climbed 0.2 percent in the fourth quarter from the previous three months, the smallest gain in 2 1/2 years, according to government data earlier this month.
More Singapore Taxes
The city-state imposed an additional 10 percent stamp duty on Dec. 7 for homes purchased by foreigners. The extra levy will be 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property. A total of 55 percent of Keppel Land’s assets are in Singapore as of Dec. 31, and China accounts for 28 percent, it said yesterday.
DMG & Partners Research said a note today that Keppel Land’s results were “slightly ahead” of expectations, and the payout exceeded its estimate of 18 cents a share.
“KepLand’s near term focus for capital deployment lies in the commercial segment given policy overhang on both Singapore and China markets,” the brokerage, which maintained its “buy” recommendation on the stock, said in the report. The Beijing property purchase “may allay some possible market concerns on uncertainty regarding KepLand’s currently evolving business model,” it said.
--Editors: Linus Chua, Tomoko Yamazaki
