Keppel Land Limited: Clinches Sengkang condominium site

- Keppel Land topped Sengkang condominium site tender with $286.79mil
- Merely 4.5% higher than the second highest bidder
- Superior accessibility to Sengkang integrated transportation hub and amenities.
- Upgrade from Hold to Buy with fair value unchanged at $4.99

Topped Sengkang condominium site tender with $286.79mil
Keppel Land has on 15 Mar submitted a top bid for a condominium site at Sengkang Square / Compassvale Road launched by HDB. The top bid of $286.79mil is merely 4.5% higher than the second highest bid submitted by a CDL-led consortium. There were in total 9 contenders bided for the condominium site which is in close proximity to Sengkang integrated transportation hub. The 17,700 sqm site could yield GFA of 53,100 sqm and maximum 530 dwelling units. The top bid works out to $502 psfppr which is reasonable in our view, given its superior accessibility to the various public transportation modes, shopping mall and neighbourhood schools.

We estimate KPLD could breakeven at the range of $880 to $910 psf and the development could easily fetches $980psf. As a comparison, CDL managed to offload 150 units out of the 200 units launched in its condominium development, H2O Residences @ Fernvale Link, over the first weekend of March at an ASP of $920psf. That means the profit margin for KPLD from this development is rather thin at the range of 7.7% to 11%. Nonetheless, this project serves well as another landbank for its residential operation in Singapore and we believe KDLP is very likely to be awarded the site. KPDL shall be launching it for sale in 6 to 9 months time to keep its turnover period short, as what it did for The Lakefront Residences.

Upgrade to Buy with fair value unchanged at $4.99
This project is NPV positive but adds less then 1 cent to its RNAV due to the thin margin. As a result, RNAV remains unchanged at $4.99. We continue to apply zero discount / premium to its RNAV. Given its current attractive valuation in the recent weeks sell down, we are upgrading our recommendation from Hold to Buy, representing a potential upside of 21.12% over its latest closing price.

Source