Thursday, July 23, 2009

Keppel Land Q2 net profit rises 10.4%

Property group will speed up launches as market recovers in S'pore and region

KEPPEL Land - which reported a 10.4 per cent year-on-year rise in second-quarter earnings yesterday - says it will speed up launches in Singapore and the region as the property market picks up.

'With improved market sentiment, we plan to launch Madison Residences and The Promont in the second half of 2009,' said group CEO Kevin Wong at a briefing. They will debut in 1-2 months' time at market prices, which are hard to fix now because prices can move very quickly nowadays, he added.

For the second quarter ended June 30, Keppel Land posted a net profit of $58.2 million - up 10.4 per cent from a year ago. This was driven by a 34.4 per cent increase in sales to $249.9 million.

Reflecting the recent upturn in the property sector, Keppel Land's performance was markedly better than it was a quarter ago. Its Q2 net profit was 57.7 per cent higher than that in Q1, boosted by a 60.3 per cent higher contribution from property trading.

These contributions came from local and overseas residential projects. Here, Marina Bay Residences, The Sixth Avenue Residences and The Tresor were some which did well. Also, Park Infinia at Wee Nam is almost fully sold. Buyers took up 26 units there from January to June at about $1,400 per square foot on average - some $500 psf more than when the project was launched in Q2 2005.

Keppel Land is still holding back on the Marina Bay Suites project and may launch it if the market improves further.

Keppel Land also sold over 1,440 units in China in the first half of the year and resumed sales at The Estella in Vietnam. The company will accelerate project launches in both countries.

Besides property trading, property investment also improved from the previous quarter, by 5.2 per cent. This came on the back of higher rental income from Singapore and a greater share of profit from K-Reit Asia.

Keppel Land noted that the office leasing market has become more active as the economy stabilises. Pre-lease negotiations have also begun for Ocean Financial Centre, and more leasing enquiries have come in for Phases One and Two at Marina Bay Financial Centre, which have pre-commitment rates of around 66 and 55 per cent respectively.

In contrast, earnings from fund management fell from Q1 while hotels, resorts and other businesses registered a small loss.

Keppel Land's private fund management vehicle Alpha Investment Partners runs a few funds. Its Alpha Asia Macro Trends Fund raised $1.7 billion and has invested around 11 per cent of this. The portfolio includes a retail property in Tokyo.

As at June 30, Keppel Land's net debt-to-equity ratio stood at 0.23. This fell from 0.54 a year ago after the company undertook a rights issue in April, raising gross proceeds of some $707 million.
Supported by a cash position of around $1.2 billion, Keppel Land said that its property
development and fund management divisions are actively looking to acquire assets.

Keppel Land's first half results were dragged by weak performance in Q1. For the half year ended June 30, net profit was $95.1 million, down 15.8 per cent from a year ago. Sales fell 13.8 per cent to $395.6 million. The company did not declare a dividend for the period.

In its best showing in more than a month, the counter yesterday gained five cents to close at $2.54.


Source: Business Times, 23 July 2009

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