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How Did Keppel Corporation Limited’s Property Business Fare In The 2018 Second-Quarter?

Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments, namely, Offshore and Marine, Property, Infrastructure, and Investment. On 19 July, the conglomerate reported its second quarter results for the year ending 31 December 2018 (1Q FY2018). Let’s have a quick summary of its Property segment’s performance.

Financial performance

Here’s a table showing some key financial numbers for the Property business for the second quarter of 2018:

Source: Keppel Corporation Results Presentation

As a quick introduction, the Property division deals with property trading, property investment, hotels and resorts, and real estate investment trust.

We can see from the table that the Property division had a mixed quarter with weaker revenue but higher profitability.

To start with, revenue more than halved mainly due to lower revenue from Singapore and China property trading. Yet, profitability improved mainly due to en-bloc sales of development projects and fair value gain on Nassim Woods, which has been designated as redevelopment for sale.

What’s useful to know is that the property segment was the biggest contributor to Keppel Corporation’s net profit, accounting for 92% of the latest quarter’s bottom-line.

The future

In its latest earnings update, the conglomerate shared a few words on the Property segment’s future:

“The Property Division sold about 1,420 homes in the first half of 2018, comprising about 130 in Singapore, 800 in China, 80 in Vietnam, 150 in Indonesia, 225 in India and 35 in Thailand.

Keppel REIT’s office buildings in Singapore and Australia maintained a high portfolio committed occupancy rate of 99.3% as at end-June 2018. Market sentiments in Singapore are expected to be dampened by new government cooling measures effective from 6 July 2018, which include higher Additional Buyer Stamp Duty rates for home buyers, investors and developers as well as the tightening of Loan-to-Value on housing loans. The Division will remain focused on strengthening its presence in its core and growth markets, while seeking opportunities to unlock value and recycle capital.”

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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.