OCBC Investment 2015-08-14: City Development Limited - 2Q15; Fairly Resilient Results.

CITY DEVELOPMENTS LIMITED C09.SI

Fairly Resilient Results 

  • CityDev’s 2Q15 PATMI decreased 3.2% YoY to S$133.5m mainly due to lower contributions from its property development and hotel segments, partially offset by higher other operating income (realization of investments in a private real estate fund) and higher financial income. 
  • In terms of the topline, revenues for the quarter also dipped 4.2% YoY to S$824.9m mostly due to weaker numbers from property development (down 18% to S$268.9m). 
  • Hotel subsidiary M&C reported a 21.7% increase in PATMI to GBP28m for the quarter which is attributed to income from newly acquired hotels and refurbished rooms returning to inventory. 
  • Overall, we judge 2Q15 earnings to be broadly in line with expectations. A special interim dividend of 4.0 S-cents is declared. 
  • Maintain HOLD with an unchanged fair value estimate of S$9.53. 


Softer contributions from development and hotels 

  • CityDev’s 2Q15 PATMI decreased 3.2% YoY to S$133.5m mainly due to lower contributions from its property development and hotel segments, partially offset by higher other operating income (realization of investments in a private real estate fund) and higher financial income. 
  • In terms of the topline, revenues for the quarter also dipped 4.2% YoY to S$824.9m mostly due to weaker numbers from property development (down 18% to S$268.9m). Hotel subsidiary M&C reported a 21.7% increase in PATMI to GBP28m for the quarter which is attributed to income from newly acquired hotels and refurbished rooms returning to inventory. 
  • Overall, we judge 2Q15 earnings to be broadly in line with expectations. A special interim dividend of 4.0 S-cents is declared. 

Strong execution on projects 

  • We are still seeing decent sell-through rates at the group’s launched domestic residential projects: Coco Palms (944 total units), Jewel@Buangkok (616 total units) and the more recently launched The Brownstone (EC, 638 total units) are 85%, 86% and 30% sold, respectively. 
  • In addition, an EC project in Yishun, The Criterion (505 total units), will likely be launched in 4Q15. Management indicates that the office component of the South Beach Tower is now 96% leased and the 654-room hotel component will open in Sep 2015. For the group’s overseas projects, building works for UK projects in Belgravia, Knightsbridge and Chelsea has started and we understand sales will commence closer to completion. 
  • CDL’s acquisition of the prime 18k sqm site in south-west London is expected to complete in 4Q15 and management expects to launch the 213-unit project for sale in 2016. In China, 281 units (~60%) of Tower 1 in the Suzhou Hong Leong City Center mixed-use development have been sold, and the 126-unit Eling Residences in Chongqing will begin sales in 4Q15. 
  • Maintain HOLD with an unchanged fair value estimate of S$9.53.

Eli LEE | http://www.ocbcresearch.com/ OCBC Investment Research 2015-08-14
HOLD Maintain HOLD 9.53 Same 9.53


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