Brokers' take

Keppel Corp > Buy DBS Group Research, Jan 26 Jan 26 close: S$8.63 Target price: S$10.20

KEPPEL'S property segment remains undervalued, notwithstanding its huge historical landbank of 6.5 million sq m held at a low cost. Half of the landbank is currently under development, realising its RNAV over the next 3-5 years. Out of its remaining undeveloped landbank, 40 per cent is for development projects in Tianjin Eco-City, which Keppel acquired in 2009 at less than one-tenth of the current land price, which is yet to be reflected in our RNAV. The ongoing portfolio rebalancing exercise will unlock values of completed projects.

Hence, we believe the current steep 30 per cent RNAV discount should narrow to about 10 per cent, pushing its share price closer to our highest-on-the-street TP of S$10.20.