City Developments - CIMB Research 2017-10-04: Successful Tender For Amber Park Enbloc Site

City Developments - CIMB Research 2017-10-04: Successful Tender For Amber Park Enbloc Site CITY DEVELOPMENTS LIMITED C09.SI

City Developments - Successful Tender For Amber Park Enbloc Site

  • City Developments (CDL) and Hong Realty have made a successful bid for Amber Park at S$906.7m.
  • This replenishes CDL’s Singapore land inventory, adding a potential 800 condo units.
  • We maintain our Add call with a target price of S$12.54.

Successful bid for Amber Park

  • City Developments (CDL) and Hong Realty, the private real estate arm of the Hong Leong Group, have won the Amber Park enbloc tender. The tender was keenly contested, attracting eight submissions.
  • The price of S$906.7m works out to be S$1,515psf ppr. CDL will take 80% of the project while Hong Realty will take the remaining 20%. At this price level, this will be the largest freehold collective sale by dollar value in Singapore to date.

Well located site, potential to house 800 condo units

  • CDL and Hong Realty plan to redevelop the land parcel into a luxurious development comprising c.800 condo units with basement carparks. Amber Park sits on a 213,675 sq ft land area with a potential GFA of 598,290 sq ft.
  • Located along the Amber Rd enclave in the East Coast area, the site is close to the beach, notable schools and shopping amenities as well as being highly accessible to the upcoming Tanjong Katong MRT station (completing in 2023) and highways.

Expect project to be value-accretive

  • This transaction would enable CDL to replenish its Singapore land inventory. Based on the above land price, we estimate breakeven cost to be c.S$2,000-2,100psf. This compares with transacted prices of developments within the vicinity of S$1,600- 2,200psf over the past few months. 
  • Assuming an estimated selling price of S$2,200psf, we estimate this project could add c.5 Scts to CDL’s RNAV.

Maintain Add

  • This latest tender continues to reaffirm our optimism over the recovery of the private residential market. Declining completions over the next 2-3 years should be supportive of the nascent price recovery.
  • We maintain our Add rating with a target price of S$12.54, premised on a 20% discount to RNAV of S$15.67.
  • Downside risks to our call include slower than expected sales at overseas and local development projects.

LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2017-10-04
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 12.540 Same 12.540