Merger Analysis

The product market is the real estate industry that varies among the residential areas,
(condominiums, and subdivisions) commercial spaces, (buildings for office and administrative
uses) recreational and tourism areas, (hotels and country clubs) land improvement, (developing
areas into smart cities, central business districts or IT hubs) and other services such as REIT
(Real Estate Investment) Funds, storage spaces and more.

Century Property Group, Inc. currently holds 5.63% of the market. The property industry
in the Philippines is a competitive market with more than 30 companies competing in the
property industry. They provide real estate on residential and commercial spaces that are
located in NCR and currently expanding their operations in Region 3 and Region IV-A

With the merger of Century Properties group and Keppel, projects on the condominium
units will have an impact by having an improved sustainable urbanization approach; and having
more presence on the central business districts because of the key locations of Century and
Keppel with their sustainable urbanizations and combined amenities.

Pursuing an expansion on other key areas such as Baguio city, Cebu, Davao City, and
other key areas in Region 3 can be less burdensome due to increase in financial ratios. Current
ratio of Century Property was 2.13 and will increase to 2.14 after merging with Keppel; quick
ratio of Century Property was .96 and will remain the same after merging; debt-to-equity was
1.72 and will rise to 1.73, while asset-to-equity will rise to 2.86 from 2.72.
 PESTEL Analysis

Political

The government is currently constructing various infrastructures to ensure that business

transactions are going smoothly by conducting projects that will ease the flow of traffic,
improve public utilities and provide more public utilities. It was estimated that this will
contribute in the increase of middle class affected by the improved economic conditions
that will create a demand in the real estate sector due to the increase of income.

Also, with the government eyeing to make amendments with the current status of the
Philippine’s offshore gaming sector, this will bring an influx of Chinese investors sector that
are heavily investing in the property industry and will employ a significant amount of
Chinese workers from the Philippine’s offshore gaming sector.

With Century Properties positioning their projects on the key central business districts in
NCR, investors will surely notice their properties and would take their company into
consideration.

Economic

According to PSA, China was the second largest foreign investor in the Philippines, with
the Philippine’s offshore gaming sector now being studied for tax effects that will bring a
significant amount of revenue in our country, Chinese investors will invest on properties
that will help their business to operate here in the Philippines.

OFW remittances are expected to have a quick recovery (V – shape recovery) after the
pandemic; therefore there will be surely a sufficient amount of income for many
households that will satisfy the demand for a low cost to midrange cost of economic
housing.

Due to an influx of foreign and local investors coming to the Philippines and with the
help of the Build! Build! Build Program providing more infrastructures to ease of doing
business in the Philippines, more demand in commercial spaces for office use will be
created in the real estate industry.

With more income available in the local and foreign customers of the real estate
industry, Century Properties with one of a high market shares among several competitors in
a competitive industry, they will have an influx of customers.
Social

A rise in the urban population especially in NCR over the past few years will have a
demand of real estate properties. The more population present, the more demand that will
be expected in the real estate industry; whether be it on the low cost housing, to midrange
cost up to the high end specs of the property.

One factor that affects the increase in urban population is due to the job market being
highly concentrated in the NCR where the central business districts are. One industry that
has a significant amount of workers that needs housing is the BPO industry. With the help of
PAG-IBIG some employees are looking for properties to settle in near their jobs.

Although, currently the effects on the pandemic is now recovering, the prices in the real
estate was greatly affected, with real estate dealers giving a more flexible payment
schedules and less amount of down payments that saw a lot of households taking the bait.
COVID-19 also saw a lot of foreign investors temporarily halting their business in the
Philippines that greatly impact the economy of the Philippines; it will be projected that this
effect will also be normalized after the pandemic.

These social effects will have an impact on Century properties pricing on their real
estate expanding their target market to the middle class that will need a more affordable
residential property and a more flexible payment schedules.

Technological

Keppel Philippines Properties is the arm of Keppel Corporation, a multinational company

in Singapore that provides sustainable urbanization. One of their solutions for sustainable
urbanization is that they support safe and efficient harvesting of energy sources. They have
the technology to provide renewable energies, sustainable district cooling systems and an
efficient and sustainable delivery of oil and gas.

With Century properties and Keppel merging, new practices on construction and how
they will provide sustainable urbanization will give Century Properties an efficient and faster
ways of constructing their projects.

Legal

The Tax Reform Acceleration and Inclusion (TRAIN) Law took effect in 2018 had
significant effects on the real estate sector; the estate tax is now at a uniform rate of 6%
 from the 5% to 20% on the prior NIRC, it also gave an exemption of properties valued at Php
10 million below. Donor’s tax is also now at the uniform rate of 6% and now ignores the
relationship between the donor and the donee. And properties valued at Php 1.5 million
and higher on vacant lots and Php 2.5 million for house and lots and condominiums are now
subject to value added tax.

Due to the effects of TRAIN law on value added tax, Century properties have properties
that will fall under the threshold for value added tax.

Environmental

Keppel also provides solution to environmental problems; one of these solutions is the
waste-to-energy technology that provides non-recyclable waste materials into usable heat
or electricity through the process of incineration. The recovery of energy from waste
generates renewable energy and reduces reliance on landfills that produce methane. From
individual processes to full-scale plants, the proven and patented WTE technologies have
been successfully implemented in more than 100 facilities globally across Asia Pacific,
Europe and the Middle East. Through the proven technologies, Keppel help cities manage
their waste sustainably.

With the effect of merger of Century properties and Keppel, the projects that they will
undergo will surely adopt the practices of Keppel providing an efficient way to convert waste to
energies.

Porter’s Five Forces.

Competition in the industry

The Competition of the real estate sector in the Philippines is a competitive market.
According to the Herfindahl-Hirschman Index (HHI) the real estate’s summation of the squares
of the individual company’s market share was 31.06; a classified to be a competitive market.

With the Century properties having a market share of 5.63% and Keppel having a market
share of .012%, the merge will give a rise of a total of 5.642% of overall market share a small yet
a significant amount increase because of the number of participants in the industry.

Potential of new entrants in the industry

The Philippines has a lot of lands that has a potential to be converted into residential
areas, commercial areas, or recreational and tourism areas. The new entrants are expected to
be compliant to the environmental requirements of the Philippines and will provide
compensation to the environment. Entering into a competitive market may be a hard time for
the new entrant and if effective, may give Century properties a consideration on how they will
react to this new entrant. With the merger of Century and Keppel, having adopted the
sustainable urbanization practices, Century will have a keen advantage over the new entrants
and current competitors.

Power of suppliers

The suppliers of the real estate industry are the raw materials that are needed to
construct residential, commercial or recreational and tourism spaces. With the help of the
Build! Build! Build! Program, the supplies of the real estate industry are surely in demand and
suppliers will keep up to meet this demand and provide the needs of Century properties.

Power of customers

Even though the pandemic has a great impact on the income of the customers of the
real estate in the Philippines, it was expected to have a recovery especially among the OFWs
that are eager to buy properties.

Threat of substitute products

Recreational, tourism and storage real estate will cause an indirect threat to the
residential and commercial projects of Century properties due to the changes in the consumer’s
attitude especially when the pandemic ends; a demand surge on the recreational and tourism
real estate properties will happen due to people being under quarantine under a long time. This
will affect the operation of the Century properties because the consumer’s attitude is not
directly in line with what the Century properties are offering.

Evaluation of the target

Keppel Philippines Properties, Inc.

Overview
 Keppel Philippines Properties, Inc. is a Philippines based property company. The
company golds investments in associates involved in property holding and development,
and also offers management consultancy services to associates.
 The company engaged in the acquisition and development of land sites for residential,
office and commercial uses.
  Keppel Philippines Properties, Inc. is a subsidiary of Keppel Land Limited, a property
company, where it is one of the flagship multinational companies with a global footprint
in more than 20 countries.
 Keppel Philippines Properties’ headquarters are in Penthouse Benquet Centre Bldg,
Mandaluyong Central Post Office, Bicol, 1550, Philippines

Project Accomplished
1. Palmdale Heights
 A middle-income residential development located in Pasig City. This is a 10-
storey condominium buildings; fifteen alternative buildings can rise within the
next 2-3 years during this massive complex.
2. The Podium
 An upscale shopping mall in the Ortigas central business district that offers
approximately 150-specialty stores, restaurant and service shop malls designed
with a modern mis glass, curves and green. This was a joint project of Keppel and
a BDO Unibank.
3. Podium West Tower
 The Podium West Tower is a joint venture between Singapore’s Keppel Land and
BDO Unibank. This is regarded by some quarters as a gamechanger that raise the
profile of the Ortigas business district as the preferred office address of many
local firms and multinational companies. The tower was pronounced as the #8
tallest in Mandaluyong City and as the #24 Tallest in the Philippines.

Key Statistics
1. Keppel Philippines Properties Inc. closed at 2.92, 22.18% above the 52 weeks low of 2.39
set on June 25,2020 this October 29, 2020
2. Price moved over 11.01% to 3.07%
3. Market Capitalization
 The current market value of Keppel is P849.80 M. Investing in Keppel does not
necessarily bring in huge return in a short period of time, but on the long run
Keppel generally reward investors with a consistent increase in share value and
dividend payments since Keppel are have been established for so long and there
is a room for expanding and development of the company since it shows
potential in the future basing from the projects done last by Keppel.

4. Earnings Per Share

  EPS of Keppel as of the 2nd quarter of this year valued at -0.32. This shows that
the company’s profitability was greatly affected by the pandemic caused by
COVID19. There are less investors in which are not willing to invest money
knowing they would loss the money. However, negative EPS is expected knowing
that most operation in the Philippines have ceased due to the government policy
that need to abide for the precautionary in handling the pandemic COVID19
thus, a negative EPS is not necessarily a reason to panic.
5. Free Float valued
 The shares of Keppel that can be publicly traded and are not restricted valued at
P23.84M. This shows that atleast 30% of the shares are cab be publicly traded.
This is a big free float that increase investors to buy since the free float of Keppel
are not that small in which it is more volatile.
6. Shares Outstanding valued at 299.3M
7. Average Volume 7.57K
8. Return on Investment -2.44%
9. Return on Asset

Key Competitive Advantage

1. Training and Development
 Keppel provide 27.6 Hours Training per employee globally which makes all
employees goal oriented and have global experience that helps build the
standard and performance of the company that contributes to the growth and
development of the company.
2. Employee Engagement
 The overall engagement score of the employees of Keppel are 86% in which it is
higher than the normal average of 76% among the Philippine companies.
3. Safety
 For the 25 years of operation of Keppel, there are 0 casualties reported as of
2019.
4. Social Investment
 Invested in worthy social causes, including caring for the underprivileged,
supporting education, and protecting the environment.
5. People and Community
 People are the cornerstone of the company. Keppel are committed to providing
a safe and healthy workplace, as well as investing in training and developing our
people to help them reach their full potential.
6. Volunteerism
 Of community service achieved by Keppel Volunteers, an increase of over 4,000
hours compared to 2018.
 7. Energy Savings
 In estimated cost savings from energy efficiency initiatives implemented in 2019
and from Keppel Land’s Green Mark-certified developments

Significant Milestones
 One of the milestones of Keppel where they seal a project to developed and operate a
maiden project in Johor, with a targeted 2020 completion date.
 Keppel have been partnered with Phu Long to develop 3 land parcels in HCMC’s
Southern corridor.
 Keppel Land and Keppel Urban Solutions celebrated the groundbreaking of
Saigon Sports City in HCMC, Vietnam.
 Keppel Land acquired four properties in China for about RMB1.1 billion, and three land
plots in the Nha Be district of Ho Chi Minh City (HCMC), Vietnam for about $76 million.
 Alpha Investment Partners, on behalf of its funds under management, including AAMTF
III, and Allianz entered into agreements to acquire an 85% interest in a $1.5 billion
Grade A Office complex in Beijing, China.
 It was announced that Keppel Bay Tower would become Singapore’s first commercial
building to be fully powered by renewable energy from 1 January 2020.
 Keppel T&T divested its stakes in Keppel Logistics (Foshan) and Keppel Logistics (Hong
Kong) for about $39 million.
 Keppel Land secured its first green loan facility of $170 million from HSBC Group China
for the development of Seasons City (Phase 1) in Sino-Singapore Tianjin Eco-City (Tianjin
Eco-City), China.
 Keppel O&M signed a memorandum of understanding with the Maritime and Port
Authority of Singapore and Technology Centre for Offshore and Marine, Singapore to
develop the first autonomous vessel for operations in Singapore
 Keppel Land deepened its presence in India with a US$25 million investment in
Smartworks, a leading pan-India flexible space solutions provider and entered into a
joint venture with Rustomjee Group to jointly develop additional homes and retail units
as part of the Urbania integrated township located in Thane.
 Achieve a 28.8% reduction in carbon emissions intensity by 2030 from 2010 levels, in
addition to the target of a 16% improvement in carbon emissions intensity from 2020
business-as-usual levels.
 Achieve a 16% improvement in carbon emissions intensity from 2020 business-as-usual
levels.

Assessment of Target
Keppel Philippine Properties provides solutions for sustainable urbanization, focusing on
energy & environment, urban development, connectivity and asset management in which it
boost to attain the vision and mission of Century Properties Building Passion where there vision
is to be the Philippines’ foremost developer of innovative, well-designed, sustainable residential
and commercial developments, and to be the trusted partner of global citizens in realizing their
goals of owning a home or an investment property in the Philippines. The merger acquisition
can help Century Properties to expand their market globally. Since Century Properties is one of
the leading real estate companies in the Philippines, they need to expand their market globally
for the future growth and development of the company. Keppel Corporation is geographically
diversified in Asia, with Singapore, China and Vietnam as its key markets, while it continues to
scale up in other markets such as Indonesia and India. Keppel Corporation can also maximize of
building the project of Century Properties since they are both focus on Real Estate. Century and
Keppel most project have been in the Ortigas Center where it a central business district located
within the joint boundaries of Pasig, Mandaluyong and Quezon City, within the Metro Manila
region in the Philippines. With an area of more than 100 hectares, it is Metro Manila's second
most important business district after the Makati CBD. This can reduce the lead time of the
project made in the market.

Assessing the Competitive Environment

According to the HHI the real estate market of the Philippines is a highly competitive market before the
transaction. (Table shows the main competitors and Keppel Philippines Properties, Inc.)

Even after the transaction the real estate market will still be a highly competitive market
since it is composing of more than 30 participants.
 The effect of the transaction will show that the market concentration will be the same
but Century properties’ presence in the NCR especially in the central business districts will be
stronger since Keppel’s projects are within the heart of the business districts of Makati and
Ortigas.

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