Hampered by slower residential activities. Keppel Land’s net profit of $36.9m is within expectations. The yoydecline in topline, pre-tax and net profit level reflected the drag from slower residential development activities, as the absence of profits from completed projects was partially offset by higher progressive billings from pre-sold projects under development and higher rental and fund management income.

Launch pipeline remains robust. Although outlook remains challenging, the group had benefited from the policy measures through improved sales in China and Singapore. It plans to further launch c7500 units in Singapore and overseas over the next 2 years.

Contributions from these projects should underpin income stream going forward. Concern over its office development exposure and consequent higher gearing, estimated at 0.93x in the next 3 years, appears to have been factored into share price and is partially mitigated by cashflow from the residential component of these projects.

18% upside to target price. Maintaining our BUY call on Keppel Land largely on valuation grounds. Share price is trading at a 50% discount to RNAV of $3.47 and at an implied office value of $1200psf. In view of the improved investor risk appetite, we have attributed a 40% discount to RNAV. Keppel Land’s target price of $2.08 is premised on the midway mark between the average and –1SD historical discount range.