City Developments (CIT SP) - Maybank Kim Eng 2017-10-06: Redeveloping Amber Park

City Developments (CIT SP) - Maybank Kim Eng 2017-10-06: Redeveloping Amber Park CITY DEVELOPMENTS LIMITED C09.SI

City Developments (CIT SP) - Redeveloping Amber Park

Raising RNAV & Target Price; reiterate BUY 

  • We update our models to incorporate the redevelopment of Amber Park.
  • CityDev’s latest win of this site has enhanced its appeal as a proxy to a home-price rebound in Singapore with this sector now accounting for almost one-third of its valuation. 
  • The recent uptick in the URA Property Price Index (PPI) has marked a turning point for the market. Consequently, we expect CityDev to trade on par with its RNAV, as in the initial stages of an upcycle in 2010. 
  • We remove the RNAV discount previously applied and raise our Target Price to SGD13.60 (from SGD12.05). Maintain BUY with catalysts expected from a property price rebound. 
  • Risks from a sharp fall in property prices and surprise policy tightening.

Successful bid for Amber Park 

  • CityDev recently announced a successful bid for the Amber Park site. It will take an 80% stake in its redevelopment, with Hong Leong Group (Private) holding the other 20%. 
  • The property will be redeveloped into an 800-unit luxury condominium with a total GFA of 598k sf. 
  • Located in the eastern side of Singapore, the property is close to Parkway Parade, a popular mall, and East Coast Park. It is also within walking distance of an upcoming MRT station along the Thomson-East Coast Line. We expect the project to be reasonably profitable, with home prices on the rebound.

Good exposure to rising home prices 

  • CityDev offers exposure to various market segments. It can capitalise on renewed interest in the high-end market with two launch-ready projects, New Futura and South Beach Residences. 
  • In the mid-to-mass market, it can continue to cater to strong demand from upgraders with a project in Tampines Ave 10, two legacy sites in Upper Changi Road and the redevelopment of Amber Park. Apart from that, it still has over 600 unsold units from previous projects.

Home price rebound could close RNAV discount 

  • The 0.5% QoQ increase in the 3Q17 URA Property Price Index flash estimates has marked a turning in Singapore’s property market. Consequently, we remove our RNAV discount for CityDev. This is in line with its trading history during the initial stages of an upcycle, as in 2010. 
  • We believe rising property prices and acquisitions of fresh development sites could lead to further RNAV upgrades in the coming year.

Swing Factors


  • Monetisation of investment assets conservatively held at cost.
  • Renewed interest in Singapore’s high-end residential market.
  • Strong rebound in home sales.


  • Sharp fall in home prices, necessitating impairment charges.
  • Poor execution of overseas projects. Recent ventures into China, the UK and Japan have raised risk profile.
  • Sharp increase in interest rates could hit demand for properties and drive down asset prices.

Derrick Heng CFA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-10-06
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 13.60 Up 12.050