Risks intensify for Keppel Land as ASEAN exposure grows

Its earnings will be volatile in the near term.

Keppel Land’s increasing exposure to developing ASEAN nations poses growing risks for its business profile. According to Barclays, Keppel Land’s RNAV is 75% skewed towards new developments, which can make the group’s earnings more volatile.

Keppel Land has recently revealed hundred-million dollar investments in Indonesia, Vietnam, and Manila. It is set to develop International Financial Centre Jakarta Tower 1 for S$266mn; it will also develop an office tower in Phase 2 of its existing SM-KL project in Manila for S$336m; and it has also launched the next phase of its office tower development in Saigon Centre Phase Two for S$228mn.

“With divestments of its prime office properties in Singapore, and the increase in its asset allocation to Indonesia, Vietnam, and Manila, we see a riskier business profile for KPLD than before with over 75% of RNAV skewed towards new developments. While FY14 could see increased dividends due to divestment gains, we expect earnings to be more volatile,” noted Barclays.