Company Name: KEPPEL LAND LIMITED
Research House: JP Morgan Chase
JPMorgan raises Keppel Land (K17.SG) target price to $4.70 vs $3.65, incorporates higher underlying property valuation assumptions, raises end-Dec 2011E RNAV by 28% to $6.12/share vs $4.85/share, according to Dow Jones.
JPMorgan says upgrades prompted by impact of group’s proposed asset swap with 45.4%-owned K-REIT Asia (K71U.SG). But retains Neutral rating “as we see few incremental catalysts for outperformance, especially when there are now more alternatives at either end of the risk spectrum for exposure to the Singapore office sector.”
JPMorgan says S-REITs such as Suntec REIT (T82U.SG), rated Neutral, offering FY December 2011E dividend yield of 6.0%, or active developers such as Overseas Union Enterprise (LJ3.SG) not rated, now have greater exposure to Singapore office sector than KepLand (down to 32% of Gross Asset Value estimate following completion asset swap).
House prefers Singapore developers, REITs with retail exposure such as CapitaMalls Asia (JS8.SG), Overweight, CapitaMall Trust (C38U.SG) Overweight, as “offer superior risk adjusted returns.”
Keppel Land +0.2% at $4.29.
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