"While we do not have clarity over the specific assets and timing, we see prospects of Keppel selling One Paramount ($400 million), an office park in India," JP Morgan says.
JP Morgan says the valuation of Keppel South Central, a freehold integrated development is estimated at $1.4 billion. Occupancy has reached 50% while borrowing costs are likely to have fallen to the mid 2% from the high 3% to low 4% range, JP Morgan reckons. During Keppel's 1H2025 results briefing on July 31, group CEO Loh Chin Hua said: "the building that we are in currently, Keppel Bay Tower, was actually on our balance sheet. But a few years ago, it was sold to Keppel REIT, so it is now part of our FUM. Could this also happen with Keppel South Central? Of course, that is a possibility. But we need to stabilise the leasing first."
"We would also not be surprised if additional residential landbank in China and Vietnam are sold given plans to reduce exposure to such activities except via development funds," JP Morgan says.
Keppel reported $2.1billion of landbank in 2023, including $1.1 billion of landbank in China as of 2024, which are held at cost. Keppel has also indicated its plan to divest its legacy offshore and marine assets, and return cash to shareholders from RigCo which holds its legacy rigs.
See also: UOB Kay Hian's Loh raises target price for Keppel to $10.85
"Keppel has rallied 55% versus a 25% increase for the STI over the past six months. This was on the back of Keppel announcing $500 million share buyback, disclosure of plans to sell $14.4 billion worth of non-core assets and the appointment of ex-DBS CEO, Piyush Gupta, as vice chairman. We see the resumption of the share buyback as a near-term boost coupled with further asset sales. Between 31 July and 30 September Keppel has bought back $92.6 million worth of shares (10.9 million shares) at an average price of $8.48 per share (maximum price: $8.90, minimum price: $8.23)," JP Morgan adds.
Keppel last traded at $9.23 on Oct 15.
