Keppel Land gets an early hongbao

Boosted by sale of stake in One Raffles Quay, the firm posts a seven-fold surge in Q4 profits to $572 million

Keppel Land kicked off the current quarterly earnings for the property sector on a positive note with a strong set of results, but analysts said the sharp gains may not be repeated in the current year as businesses could face weaker business conditions.

The seven-fold surge in net profit to $572 million for the three months ended Dec 31 was boosted by a one-time capital gain from the sale of its one-third stake in One Raffles Quay (picture).

Keppel Land is proposing a final dividend of 8 cents per share and a special dividend of 12 cents per share. For the full year, it said profit after tax rose almost four times to $780 million from $200.3 million the year before.

Singapore’s second largest property developer’s results bids well for the rest of the sector, but analysts warned that property developers in general may not see such buoyant conditions this year, with weak market sentiment resulting in delays in property launches.

The launch of the Marina Bay Suites has been delayed until after Chinese New Year “to wait until people get their bonuses and perhaps, after people get their hongbao (red packet)”, said Keppel Land chief executive officer Kevin Wong.

Both housing and office property prices reached records last year, but with the US sub-prime crisis widening, companies are starting to tighten their spending on worries of a global slowdown.

The latest Urban Redevelopment Authority data showed that sales and rental prices for private residential and office properties have risen at a slower pace in the fourth quarter versus the third quarter of 2007. For the whole of last year, private home prices rose 31.2 per cent and prices of office space rose 32.6 per cent.

The rising price trend will continue and will broaden to the mass residential market, but the gains won’t be as aggressive, with analysts forecasting no more than a 15-per-cent rise in property prices on average.

“The drivers for earnings growth this year (for Keppel Land) are most likely from projects in emerging markets like China and Vietnam,” said CIMB analyst Donald Chua.

Source : Today – 30 Jan 2008

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