Slight improvement in sales. In the quarter, KepLand sold over 120 homes in Singapore, compared with the 19 Bulk of the sales were from The Luxurie at Sengkang, where 92 units were sold in 3Q12. In China, KepLand sold ~290 units in the quarter, taking YTD sales there to around 980 units. launch 1,643 homes in China by the end of the year.
Making a bullish statement. On 16 Oct, barely Singapore government introduced the sixth round of cooling measures targeting the residential segment, KepLand put SGD434.6m, or SGD791 psf ppr for a condo site in Tanah Merah. We estimate the breakeven to be SGD1,250 psf nearby are commanding at the moment. The project's ASP is be ~SGD1,400 psf for a thin pre-tax ma accretion would be 4 cents/share.
Acquires fifth site in Chengdu. On the very same day, KepLand also announced that it is acquiring a 28.7 ha site at Mumashan in Chengdu for RMB680m (SGD133m). The site is adjacent to one which the Grou already owns and is being developed for 274 landed homes. KepLand intends to build 573 landed homes on the new site and we expect an RNAV accretion of
4 cents/share based on an ASP of RMB15,000 psm.
Beauty in diversification. We continue to favour KepLand's diversified business, which is backed by a strong balance sheet. Maintain BUY with a higher target price of SGD4.10, suggesting a 19% upside.
Aggressive Bid for Tanah Merah site
Beefing up suburban landbank. In a URA tender for a 3.2ha residential plot that closed on 15 Oct, KepLand put in a top bid of SGD434.6m, or SGD791 psf ppr. Located beside the Tanah Merah MRT Station, the site drew keen attention, attracting eleven bids in all. With a total GFA of 549,082 sq ft, KepLand intends to build around 700 units, each ranging from 500 to 1,400 sq ft.
Surprisingly bullish. We are quite surprised by KepLand’s bullish bid for the site, given that it was the first tender to close since the latest round of residential cooling measures. On a psf 17% higher than a nearby plot sold in August to Fragrance/World Class Land and a whopping 48% higher than the site sold in February, which is now being launched by Far East Organization as eCO.
Margins appear thin. We estimate the breakeven price for KepLand's site at approximately $1,250 psf, which is comparable to what eCO launched in Sep) is commanding now. The median price for secondary transactions at Optima on the other side of the road is also at around $1,200 psf. We expect KepLand to try and close to $1,400 psf, for an 11% pre-tax margi room for error. We estimate the RNAV accretion from this acquisition at just 4 cents/share.
Picks Up Another Site in Chengdu
Acquires second site at Mumashan. KepLand also announced on 16 Oct that it has acquired a 28.7ha site in Mumashan, Chengdu for RMB680.4m (or SGD133m). KepLand intends to build 573 landed homes on the site, which is adjacent to the site of Hill Crest Villas, another of KepLand's projects where the Group landed homes. With a GFA of 243,100 sqm, we estimate an RNAV accretion of 4 cents/share from the new site assumption of RMB15,000 psm.
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