Keppel's property segment stands robust as impairments hit the group

It incurred $277m impairments in its O&M division.

Keppel Corporation's property division sparked hope for the group in 2016 as it delivered a strong net profit of $620m. According to OCBC Investment Research, Keppel Land reported a higher net profit of $586m, with about 5,720 homes sold comprising 3,800 in China, 1,520 in Vietnam and 380 in Singapore.

Looking ahead, OCBC said the group still expects healthy sales figures for China and Vietnam. Keppel's property segment prevented the group from sinking further, as it reported a 64.7% fall in net yields in 4Q16. 

"There were lower contributions from O&M and provisions for impairment of S$336m in 2016. Excluding revaluations, impairments, divestments and major provisions, net profit was S$300m in 4Q16, comparable with that of 4Q15.," OCBC said.

The firm noted that in 4Q16, Keppel incurred impairments of S$87.4m for fixed assets, and $120.8m for investments and associated companies. There were also provisions of $81.2m for stocks and work-in-progress, and $11.6m for doubtful debts. In 2016, the O&M division saw impairments of $277m, about S$270m of which was incurred in 4Q16.

"With the tough operating environment, apart from reducing variable costs, KEP has also cut its overheads, achieving cost savings of about S$150m year-on-year. The group has mothballed two overseas yards (Bintan, Brazil) and is in the process of closing three yards in Singapore; these are mainly supporting facilities.," OCBC said.