Lawsuit delays slashed Keppel's $290m gain from marina firm sale

Keppel was now only able to complete the deal after a minority shareholder blocked the sale.

Keppel Land China was able to sell its 100% stake in Keppel China Marina Holdings (KCMH) to Delight Prime Limited for around $590m after facing objections from minority shareholder Sunsea Yacht Club.

According to CIMB Research, this as a major milestone in unlocking capital within the property division. As of 2 April, Keppel has received $503m. “The transaction was originally planned to be completed in 4Q2017 with a gain of $290m. With the appreciation of RMB, we expect a gain of $270m to be recognised in 1Q2018,” said analyst Lim Siew Khee.

KCMH indirectly owns 80% of Sunsea Yacht Club (Zhongshan) which owns and is developing Keppel Cove, a residential and marina development on Modao Island, Zhongshan City. The development comprises a land area of 891,752 sqm with Phase 1 completed in March 2017.

Keppel will report its 1Q2018 results on 19 April 2018, and CIMB expects earnings to be supported by the $270m gain.

Other sources of higher profits could be the O&M division, which should turn in better performance without $140m of kitchen-sinking provisions. “Yard utilisation may still be lacklustre in 1Q2018F with a material milestone for FLNG Gandria conversion and Awilco semi-submersible only likely to kick in by 2Q2018. There is a possibility of O&M achieving breakeven on the back of leaner operations as suboptimal yards were substantially closed down in 4Q2017,” Lim added.

Meanwhile, the investment division may see QoQ profit with no major land sale in Tianjin Eco-City and lagged recognition of wider losses of KrisEnergy in 4Q2017.