Keppel Corporation Limited’s Latest Result: Stable Performance in Property Segment

Keppel Corporation Limited (SGX: BN4) is a conglomerate with four major business segments, namely, Offshore & Marine, Property, Infrastructure, and Investment.

The company reported its 2017 second quarter earnings last week. In this article, I will take a deeper look at the performance of its Property segment.

The financial performance

Here’s a table showing some key financial numbers for the segment for the quarter:

Source: Keppel Corporation 2017 second quarter earnings presentation

Revenue was up by 16% year-on-year mainly due to higher sales in Singapore that offset lower revenue from China.

Meanwhile, the segment’s profit before tax fell slightly in the reporting quarter. Higher contribution from property sales in Singapore were offset by a lower contribution from China property sales and associated companies.

In the second quarter of 2017, the property segment was the largest contributor to Keppel Corporation’s total net profit.

The business numbers

In the first half of 2017, the property segment sold around 2,470 homes. 1,810 of the homes were in China, while Vietnam, Singapore, and Indonesia contributed 390, 220, and 50, respectively. The total number of homes sold was 15% higher than the 2,140 homes sold in the first half of 2016.

Keppel Corporation is also the manager and sponsor of Keppel REIT (SGX: K71U). The REIT owns office buildings (four in Singapore and four in Australia) and they collectively have a high occupancy rate of 99.8% as of 30 June 2017.

The future

Keppel Corporation’s Property segment has a residential landbank of over 62,000 homes, of which about 17,000 units are ready for launch from now till end-2019.

Meanwhile, the segment’s commercial properties business has a combined office and retail gross floor area (GFA) of about 1.5 million square metres. This comprises 522,500 square metres of completed projects and 970,800 square metres of space that are under development. The commercial part of the Property segment will contribute towards growing the segment’s recurring income stream.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.