City Developments - RHB Invest 2021-11-22: Positive Catalysts Emerging; Stay BUY

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CITY DEVELOPMENTS LIMITED (SGX:C09)

City Developments - Positive Catalysts Emerging; Stay BUY

• City Developments's share price seems to have bottomed out since its announcement of divestment of its entire Sincere equity stake. We see more positive catalysts emerging from strong residential sales across its new launches in Singapore, asset divestments and redevelopment as well as a recovery in hospitality sector.
• City Developments (SGX:C09)'s valuations are attractive at 20%/54% discounts to book value and RNAV.

Strong buying demand for Canning Hill Piers

• Strong buying demand for Canning Hill Piers, with > 500 out of total 696 units sold on launch day (Nov 20) at an ASP of S$2,900psf, based on our channel checks, exceeding our expectations. The mixed-use project is jointly developed by City Developments (50% stake) and CapitaLand Development; it comprises of tallest luxury residential units, F&B/retail outlets, hotel (475 rooms), and serviced residences (192 rooms).
• The healthy pre-sales follows a similar response for its earlier launches Irwell Hill Residences and Penrose, indicating a strong brand premium locally and providing good earnings visibility. The move helps City Developments to bid competitively in upcoming land sales and replenish its land bank.

Millennium Hilton Seoul divestment should strengthen its balance sheet.

• Based on Korean plans to establish a Singapore-listed REIT with UK commercial assets, with a listing possibly in 1H22 in our view.

Green shoots emerging for the hospitality sector.

• With the easing of positive for City Developments’s earnings and also likely to result in a possible uplift to its RNAV.

ESG Score of 3.3 out of 4.0

• ESG Score of 3.3 out of 4.0, based on our proprietary in-house methodology, and applied a 6% premium to our intrinsic value. While City Developments scored highest among Singapore developers in terms of environmental and social efforts, it ranks lower on corporate governance factoring in concerns raised by its past directors on its overseas (Sincere) investment in particular.
• See
  • City Developments's Share Price,
  • City Developments's Target Price,
  • City Developments's Analyst Reports,
  • City Developments's Dividend History,
  • City Developments's Announcements,
  • City Developments's Latest News.
• Keep yield as we incorporate an ESG premium into our valuation.

Vijay Natarajan RHB Securities Research | https://www.rhbinvest.com.sg/ 2021-11-22

SGX Stock Analyst Report BUY MAINTAIN BUY 9.00 UP 8.500