Bookmark & Share
Amid a challenging domestic and international market conditions, City Developments Limited (CDL) remained resilient in second quarter of the year, posting a revenue increase of 32.4 percent to S$1.1 billion, and a 0.2 perce increase in profit after tax and non-controlling interests (PATMI) which stood at S$133.8 million.
On a half-yearly basis, revenue increased 10.7 percent to S$1.8 billion in 1H 2016, while PATMI fell 6.8 percent to S$239.1 million.
Excluding profits on sale of investments and PPE, CDL’s core PATMI of S$223 million for 1H 2016 was lower by -12 percent year-on-year, which Swiss financial institution Credit Suisse attribute to weak performance from the hotel segment, particularly from key gateway cities.
This caused global RevPARs to “decline -4.2 percent year-on-year and a -32 percent year-on-year decline in hotel PBT,” Credit Suisse said.
Meanwhile, commenting on the potential privatisation of CDL’s hospitality business Millennium & Copthorne Hotels, Credit Suisse said “[the] management remains open to exploring various options available, although the key focus now is on optimising the performance of its hotel portfolio. While early days, hotel RevPARs in the first three weeks of July recovered to +2.4 percent year-on-year, with a turnaround in London and Singapore RevPARs.”
Given the uncertain economic outlook, Credit Suisse said CDL is now recalibrating its asset portfolio more intensively, and is reviewing ways to unlock the value of its portfolio such as through a PPS platform.
“We continue to like CDL for the depth of its portfolio monetisation potential, and expect the conclusion of a third asset monetisation deal to drive further upside, allowing CDL to crystallise balance sheet value while recognising a P&L gain,” it said.
“While various potential transactions are in the works, we believe Nouvel 18 is most likely to culminate in a profit participation securities (PPS) transaction by November 2016, in time for its Qualifying Certidicate deadline.”
With this, Credit Suisse maintains its outperform rating for CDL.
“Despite CDL outperforming the STI by 18 percent year-to-date, [its] valuations remain attractive,” Credit Suisse added.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
Asia Pacific retailer sentiment improves slightly in Q2