City Developments Limited - OCBC Investment 2017-11-13: Poised To Ride SG Residential Momentum

City Developments Limited - OCBC Investment 2017-11-13: Poised To Ride SG Residential Momentum CITY DEVELOPMENTS LIMITED C09.SI

City Developments Limited - Poised To Ride SG Residential Momentum

  • 3Q17 PATMI down 8.3%.
  • Broadly within expectations.
  • Healthy sales in China.

3Q17 results in line with expectations 

  • City Developments Limited (CDL) reported that its 3Q17 PATMI fell 8.3% YoY to S$156.1m mainly due to higher divestment gains recognized in the same period last year. In terms of the topline, revenues for the quarter similarly fell 6.5% YoY to S$863.1m as contributions from the property development segment fell. 
  • Overall, we judge the current set of results to be within expectations. 
  • The group reported a strong uptake for its launched residential projects in Singapore and, for YTD Sep 2017, CDL and its joint venture associates sold 1,056 residential units in Singapore, more than double the units sold and triple the total sales value during the same period last year.

Brighter prospects for domestic property market 

  • Management highlighted that the economy in Singapore is recovering and sees brighter prospects for the domestic property market. 
  • Current Singapore condominium launches Gramercy Park is now 88% sold, Forest Woods over 90% sold, and Coco Palms over 98% sold. In addition, the group’s two EC projects, The Brownstone and The Criterion, are also 99% and 90% sold, respectively. 
  • In China, CDL also sees healthy sales, with 17 villas sold and 32 villas booked out of 85 total villas at the Hongqiao Royal Lake development. 83% of the Phase 1 launch and 49% of Phase 2 of HLCC has also been sold to date. 
  • The group’s wholly-owned subsidiary CDL China Ltd also entered into a strategic partnership with China Vanke Co Ltd by divesting 70% of Chongqing Huang Huayuan and 50% of Eling Residences for an aggregate of RMB 986m. 
  • Over the quarter, the group also entered into its second collaboration with Waterbrook Lifestyle Resorts to develop a luxury retirement village in New South Wales. 
  • We update our model for the latest results and our fair value estimate increases from S$12.90 to S$13.50. Maintain BUY.

Eli Lee OCBC Investment | http://www.ocbcresearch.com/ 2017-11-13
OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 13.50 Up 12.900