This has resulted in higher prices across all residential segments.
In particular, average home price has increased annually since 2009. According to CBRE Vietnam data cited by CGS-CIMB, the increases range from 8% for affordable houses, 13% for mid-end, 23% for high-end, and 15% for luxury homes.
Given that Keppel Land derives one-third, or $84 million, of its 1H19 earnings in Vietnam, CGS-CIMB Research reckons Keppel Corp will continue to benefit from the booming property market there.
It says that higher average selling prices on the back of a supply crunch is likely to support profit before tax margins of more than 30% for its Vietnam projects.
“We believe Keppel can leverage robust demand and firm home price appreciation of 8% to 25% per annum in Vietnam,” CGS-CIMB head of research Lim Siew Khee writes in a note dated Sept 27.
CGS-CIMB has an “add” call for the stock with an unchanged target price of $8.41.
As at 4.15pm on Monday, shares of Keppel are trading down 0.7%, or 5 cents lower, at $5.94.
According to CGS_CIMB valuations, this implies an estimated price-to-earnings (PE) ratio of 11.4 times and a dividend yield of 4.0% for FY19F.
