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Profits Up 70% At Keppel Land

Keppel Land LogoThird-quarter revenues at property developer and fund manager Keppel Land (SGX: K17) jump 151% to S$418m. Profits were 70% higher at S$126m.

Keppel Corporation (SGX: BN4), which owns more than half of Keppel Land, will release results today.

Keppel Land has five business segments: Property Trading; Property Investment; Fund Management; Hotels and Resorts; and Others.

The company’s top-line growth was driven by a 214% jump in revenues at its Property Trading unit to S$362m. Higher revenues were recognised from projects such as The Lakefront Residences and The Luxurie in Singapore, Seasons Park at Tianjin Eco-City, and Jakarta Garden City in Indonesia.

Profits at the Property Trading division segment grew substantially too. They rose 173% to S$89.7m.

Other highlights included a 30% increase in revenue to S$26m compared from its Fund Management unit. Fees increased as a result of higher charges earned by Keppel REIT Management Limited and Alpha. The former is the manager of Keppel REIT (SGX: K71I) while the latter is the manager of five private equity funds. The two fund management subsidiaries of Keppel Land have total Assets Under Management (AUM) of some S$17b.

Keppel REIT’s third-quarter results saw a 0.5% year-on-year increase in quarterly distribution per unit (DPU) to 1.97 Singapore cents. The management fees that accrue to Keppel Land could be affected by the REIT’s performance, so it may be something that investors may want to follow.

Profits for the Fund Management segment grew 45% to S$16.7m, driven mainly by the increase in management fees.

Elsewhere, quarterly profits from the Property Investment segment had improved by 9.3% to S$40m from a year ago, predominantly due to better performance from Keppel REIT and higher rental yields from Marina Bay Financial Centre Tower 3.

In Singapore, which is one of the company’s core markets, it sees “dampened market sentiments” among property buyers due to the implementation of the Total Debt Servicing Ratio, where a borrowers’ total debt obligations are capped at 60% of their gross monthly incomes. That restricts buyers’ ability to finance property purchases.

Sales in Singapore were adversely affected with only 310 residential units sold in the first nine months of 2013.

As for Keppel Land’s future plans, it “will scale up in growth cities in its core markets of Singapore and China as well as strengthen its position in Vietnam and Indonesia. [It] will also continue to expand its commercial portfolio overseas, unlock value and actively recycle assets to improve returns as well as grow its fund management business.”

At S$3.62, shares of Keppel Land are valued at 6.6 times trailing earnings and yield 3.3% based on its pay-out last year.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.