Land ahoy: Can land operations save the day for sinking Keppel?

It hopes to offset a disappointing marine sector.

The marine and property giant isn’t spared from volatility in its marine operations as headwinds engulf the sector. However, the well-established firm that it is, Keppel seems to have another trick up its sleeve.

According to analysts from KGI Fraser, Keppel’s optimistic land operations may be exactly what the doctor ordered for its ailing offshore and marine business.

KGI Fraser said Keppel’s land growth is driven mainly by a rebound in the property market in China, which accounts for about 60% of its 19,000 residential units.

“China’s nationwide sales of new residential developments have increased 19% YoY for the first eight months of 2015, according to the National Bureau of Statistics,” KGI Fraser said.

“According to our Greater China research team, property investment in China is expected to rebound on resumed demand. Recent data also points to a recovery in China’s property markets after declining in 2014,” they added.

Its marine operations continue to be dismal, pulled down by dwindling utilisation rates.

“Utilization rates for drillships at 70% (vs 82% a year ago), semisub at 62% (vs 73% a year ago) and jackups at 58% (vs 77% a year ago) still point to deteriorating fundamentals in the offshore rig sector,” KGI Fraser said.