The reason behind Keppel Land's healthy cash hoard in 3Q12

Gross cash position stands at S$1.49bn.

According to DBS Vickers, improvement across the board. Kepland’s 29% growth in earnings to S$74.5m, on a 49% jump in revenue to S$166.4m, was in line with expectations; 9M profits make up 76% of DBS' FY12 estimates.

Here's more from DBS:

The improved quarterly performance was fairly across the board, lifted by a S$16.7m gain from sale of a 23% effective interest in Saigon Centre P2, remaining deferred contributions from Reflections at Keppel Bay and better performance from Keppel Reit and higher fund management and hotel contributions.

Focus on residential. Operations-wise, the group recognized maiden billings from The Luxurie (94% sold) and progressive bookings from Lakefront Residences and Marina Bay Suites.

In all, it has sold 320 units in Singapore YTD. In China, it sold 290 units in Q3 (980 units YTD), mainly from Springdale in Shanghai, Central Park City in Wuxi and The Botanica in Chengdu. In terms of investment properties, MBFC3 is currently 76% committed and should generate rental income going forward.

Activity remains focused in Singapore and China. We believe Kepland’s earnings will continue to be driven by its residential activities in Singapore and China in the near term.

It has another c3000 units of homes in China and SEA to be completed and recognized in this year. In Singapore, plans to launch Keppel Bay Plot 3 possibly next year, should also underpin profits.

Healthy cash hoard. Kepland’s balance sheet remains healthy with a gross cash position of S$1.49bn as at end-3Q12 and gearing of 0.2x.

This puts them in good position to reinvest for future growth. To this end, it has recently won a residential site in Singapore, which can house up to 700 homes, and further deepened its exposure to Chengdu with the purchase of a low-rise residential plot in Mumashan.

Recent maiden foray into Sri Lanka and development of commercial properties in China and Indonesia should also reap medium term benefits.

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