City Developments 02 (Nov 16 - Dec 26)

[behappyalways]

CDL suffers from lower hotel RevPAR but office portfolio remains 'resilient'
https://www.theedgesingapore.com/capita ... -resilient

[behappyalways]

CityDev warns of 'significant losses' in 1H20 mainly from the prolonged Covid-19 pandemic
https://www.theedgesingapore.com/news/r ... 9-pandemic

[winston]

not vested

City Developments Limited (CDL SP) – Down but not out

City Developments Limited (CDL) recently guided that it expects its 1H20 pre-tax profit to be substantially lower as compared to 1H19 due to the Covid-19 pandemic.

All of CDL’s major business segments are expected to contribute to this decline, especially its hotel operations, which is expected to post a pre-tax loss of approximately S$120-140m for 1H20.

Although there are still uncertainties over the length and depth of the Covid-19 pandemic, CDL highlighted that it has sufficient liquidity to weather the crisis.

To date, it has total cash and undrawn and committed credit facilities exceeding S$5b.

We cut our PATMI forecasts and after making adjustments to our RNAV assumptions, we derive a lower fair value estimate of S$10.74 (previously S$12.01).

Notwithstanding our lower fair value estimate, we opine that deep value still exists in CDL’s shares, with the stock trading at 0.70x FY20F P/B ratio, which is 1.3 standard deviations below its 10-year mean of 1.0x.

Its current share price (as at 14 Jul 2020 close) also translates to an attractive P/RNAV of 0.50x. Maintain BUY.

Source: OCBC

[winston]

not vested

City Developments Ltd (CIT SP) - Unlocking value despite pandemic woes

City Developments Limited’s (CDL) 1H20 results missed our expectations, as PATMI tanked 99.1% YoY to S$3.1m.

No interim dividends were declared, versus 6 S cents of special interim DPS in the preceding period last year.

Given the Covid-19 pandemic, one of management’s focus would be on preserving cash, and it would see how the Covid-19 situation evolves before making a decision on its full-year dividends.

Management highlighted that it was encouraged by the resiliency of the Singapore residential market, and was able to adjust its prices slightly upwards for some of its projects.

It was thus also not surprising that CDL announced the proposed redevelopment of its Fuji Xerox Towers and Central Mall properties.

These initiatives to unlock value would be supported by CDL’s balance sheet strength.

We lower our FY20F PATMI and DPS forecasts by 21.8% and 40% to S$243.9m and 12 S cents/share, respectively.

After adjustments, our fair value estimate is trimmed from S$10.74 to S$10.64.

CDL is still trading at an attractive P/RNAV of 0.52x on our reduced RNAV estimate, based on its closing price on 13 Aug 2020. Maintain BUY.

Source: OCBC

[behappyalways]

CityDev 1H20 earnings plunge 99.1% to $3.1 mil
https://www.theedgesingapore.com/capita ... 991-31-mil

[winston]

not vested

City Developments Limited – Near-term pain but focused on the future

Recommendation: BUY (Maintained), Last Done: S$7.97

Target Price: S$10.68, Analyst: Natalie Ong

COVID-19 impacted all segments, hotel operations accounted for 82% of decline in revenue due to closure of 28% of hotel inventory and lower RevPAR (-56.6%) and lower sales value from few units sold from mass market projects in 1H20 vs ultra-luxury projects in 1H19.

Refreshing portfolio and unlocking additional GFA through redevelopment of Fuji Xerox and Central Mall.

Maintain BUY with lower TP of S$10.68, after factoring in the protracted recovery in the hospitality segment.

FY2020/21e EPS was cut by 26.1% and 7.2% respectively.

Source: Phillips

https://internetfileserver.phillip.com. ... 200824.pdf

[winston]

not vested

City Developments Ltd (CIT SP) - Concerns valid, but likely manageable

City Developments Limited (CDL) is a leading real estate developer with three core business segments, namely Property Development, Hotel Operations and Investment Properties.

It has diversified operations in countries such as Singapore, China, UK and US.

Although the impact from the Covid-19 pandemic is apparent, we believe negatives are priced in.

Furthermore, over the medium to longer term, we see opportunities for management to unlock value via the restructuring of its Millennium & Copthorne hotels portfolio, potential spin-off of its UK commercial properties into a new REIT and redevelopment of some of its older commercial properties in Singapore to benefit from the government's CBD Incentive Scheme. BUY.

Source: OCBC

[behappyalways]

Citing disagreements over investment in China, Kwek Leng Peck quits CDL's board
https://www.theedgesingapore.com/news/c ... cdls-board

[winston]

not vested

City Developments Limited (CDL) hotel arm Millennium & Copthorne Hotels (M&C) is reviewing its portfolio and may dispose of some assets under a drive to recover from the effects of the Covid-19 pandemic by as early as 2021, it said in a statement on Wednesday evening.

It said: "Having received expressions of interest for various assets globally, M&C is assessing at least three offers."

It noted that some offers are subject to re-zoning and regulatory approval for a change of use from hospitality.

"Based on current offers, M&C expects to conclude at least one such sale in 2021."

Source: Phillips

[winston]

not vested

City Dev’s hotel arm seeks asset disposal; expects hospitality recovery in 2021

City Dev’s hotel arm Millennium & Copthorne (M&C) is reviewing its portfolio and may dispose some assets amid the Covid-19 fallout.

Having received EOIs for various assets globally, M&C is assessing at least three offers, some of which are subject to re-zoning and regulatory approval for change of use from hospitality, and expects to conclude such sale in 2021, which is likely to result in a significant disposal gain.

While capital values of many properties have risen despite the pandemic, management guides that its hospitality revenue and profits are unlikely to return to pre-Covid levels anytime soon. That said, hotels with sustained profitability may be spun off to 37.8%-owned CDL Hospitality Trusts.

Its properties have started to show green shoots of improvements with global occupancy rate in Sep recovering to 40% from a low of 30% in Jun and it expects to end 2020 at half the 73% rate achieved in 2019.

Gross operating profit has also been positive since Jul, and is expected to gain momentum in 2021 as the group reduces its cost structure and has cut its global headcount by 36% since end of 2019.

Moving forward, it intends to focus on key gateway cities, including Singapore, London and New York and its three 4-star brands under M Collection, Millennium Collection and Copthorne Collection, as well as maintain several assets in the 5-star and luxury categories.

It will scale up its digital marketing to reach domestic consumers and target those that stay within 300km of its hotels in US, UK and Europe. M&C will also review and fine-tune the upgrade of its portfolio to better suit future market conditions.

However, the biggest bugbear facing City Dev is the internal squabbling among members of the founding Kwek family over its investment on the troubled Sincere Property Group.

City Dev has invested $1.9b in Sincere and now owns 21% stake in the China property group, with an option for another 9%. But Sincere is facing liquidity issues and there are disagreements whether City Dev should continue to continue funding it.

Sincere has a development land bank of 9.2m sqm of gfa and 64 development projects as well as 27 investment properties across mostly Tier 1 and 2 cities in China but its net gearing of >200% has crossed the 'Three Red Lines" of the Chinese authorities, which forbid the developer from borrowing more.

Plans to divest some of Sincere's retail, hospitality, office and business park assets to lighten its debt load has run up against a wall given the current economic climate and thus, it has been relying on City Dev for its liquidity needs.

To address concerns, the group has appointed Deloitte & Touche as financial adviser to review its investment in Sincere and unless the family feud can be resolved, this will put a cap on its share price performance.

At current levels, City Dev trades at 0.67x P/B.

Source: Maybank KE Retail Research