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Jefferies keeps City Developments at "buy" following 1QFY2022 update

The Edge Singapore
·2-min read

Valuation continues to be attractive at 0.9x stated book, 0.4x revalued book

Jefferies analyst Krishna Guha has kept his “buy” call on City Developments, following the property and hotel company’s 1QFY2022 operational updates showing “good momentum” across the various key business segments.

“The group continues to execute on its strategy of asset redevelopment and capital recycling,” writes Guha in his May 24 note, where he has indicated a target price of $9.50. Valuation continues to be attractive at 0.9x stated book, 0.4x revalued book, adds Guha.

CDL and its associates sold 188 Singapore residential units in 1Q, chalking up a total sales value of $477.9 million, down 7% y-o-y, as cooling measures introduced late last year dampened transaction volume.

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However, CDL expects prices to stay firm due to moderate supply and upcoming new launches. Construction activity has started to accelerate with labour issues being progressively sorted out. Sales momentum continues to be strong for projects with the right attributes.

For example, earlier this month, CDL and JV partner MCL Land, launched a city fringe mixed development project, which was 77% sold on the launch weekend at an average psf of $2,150.

CDL has also replenished its land bank by teaming up again with MCL Land to win a government land sale site for $1,300 psf ppr. It also bought an off-market parcel for $126 million which can be developed into 400 units.

CDL, with major interests in hotels, is enjoying a lift in this sector. Worldwide, its revenue per average room night more than doubled y-o-y to $89.6, with recovery led by UK, US and Singapore. “There is still ample room for recovery as RevPARs are still 40% below pre-pandemic,” says Guha.

CDL closed May 24 at $8.09, unchanged for the day.

 

 

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