SINGAPORE (Oct 30): Keppel Corporation announced last Thursday that Keppel Land China is divesting its 100% stake in Keppel China Marina Holdings (KCMH) for RMB2.9 billion ($597.4 million).
KCMH indirectly owns an 80% effective interest in Sunsea Yacht Club (Zhongshan), a JV which owns and develops Keppel Cove, an integrated residential cum marina lifestyle development on Modao Island in Zhongshan city, China.
With this divestment, a gain of about $290 million is expected to be recognised. Completion is expected to take place by the end of this year.
Meanwhile, Keppel’s Tianjin Eco-City project is also bearing fruit, with average selling prices of Eco-City residential land increasing significantly to RMB13,800/sqm ($2,835/sqm) this year from RMB1,700/sqm ($349/sm) in 2014.
Keppel has a 45% effective stake in Sino-Singapore Tianjin Eco-City Investment and Development, which acquires land from the Chinese government based on prices that were fixed earlier in 2008.
“We are positive on the group’s strategy to recycle assets to seek higher returns and rebalance its portfolio to focus on selected high-growth cities in China,” says analyst Low Pei Han in a Friday report.
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Keppel records land sales from Tianjin Eco-City -- to either Keppel Land or other property developers for development -- are recorded under “investments segment”.
“We take this into account in our sum-of-parts valuation, and after adjusting our estimates, our fair value rises from $7.73 to $8.31. Maintain ‘buy’,” says Low.
Shares in Keppel are up 8 cents at $7.54 or 12.7 times FY17 earnings.
