Broker: OCBC Investment Research
Fair value: $7.73.
Keppel Corporation registered a 10.8 per cent year-on-year rise in revenue to $1.6 billion and a 30 per cent increase in net profits to $291.8 million in the third quarter, boosted by a $128 million gain on disposal of subsidiaries.
Stripping that out, nine-month core earnings accounted for 73 per cent of our full-year estimate, in line with expectations. Under property, the group is looking at the possibility of redeveloping Keppel Towers; the Serangoon North project is expected to be launched in mid-2018.
Meanwhile, Keppel will also establish a new business unit, Keppel Urban Solutions, which aims to be an end-to-end integrated master developer of smart, sustainable precincts in the Asia-Pacific region.
The fair value rises from $7.36 to $7.73 with higher valuations in the property segment.
Target price: $0.31
We initiate coverage on Aspen, which focuses on affordable residential and mixed-use property projects in Penang. Aspen is an early mover in the emerging Batu Kawan market with its flagship Asian Vision City (AVC) project, which is jointly developed with Ikano.
Ikano is also opening northern West Malaysia's first Ikea store in AVC, which we expect to be a re-rating catalyst for property prices and demand. Its projects come with a cost-effective fully furnished unit option - we believe this is its key differentiating factor.
AVC, a mixed-use project, is in Batu Kawan, an upcoming growth area in Penang. It is envisioned to become an eco-metropolis with a mix of residential, office, commercial and retail spaces. Key attributes are its attractive pricing and its close proximity to the Penang Second Bridge.
The Ikea store is expected to open by the first quarter of 2019.