Keppel's property segment dethrones O&M in profits

In 9M2017, property comprised 55% of contributions, whilst O&M comprised 2%.

The contribution of Keppel Corporation's (Keppel) property to the bottomline rose drastically from 20% to 55% currently, as offshire and marine (O&M), once the star performer that accounted for two-thirds of profits, is merely at 2% now.

According to DBS Equity Research, half of Keppel's landbank is currently under development.

Keppel has a huge land bank of 6.5m sqm, predominantly for residential projects, of which 68% is in China and 24% in Vietnam.

Keppel strategically acquired the landbank at a much lower cost five to ten years ago, largely during 2007-2012.

Approximately 40% of the undeveloped GFAs are either for residential, mixed use, or township developments in Tianjin Eco-City, that was acquired from Keppel’s 45% JV Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd (SSTEC) prior to 2009, for an estimated cost of around $204.91 (RMB1,000) psm.

The land sale price in Tianjin Eco-City has since surged 14 more times to $2827.59 (RMB13,800) psm as of June 2017, implying lucrative returns when the land is developed.

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