CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

CDL shares tumble after third director quits over Sincere investment

Leadership changes in relation to City Developments Limited’s investment in Sincere Property Group has rocked the Singapore property behemoth’s share performance.

  • City Developments Limited (SGX: C09) share price drops to S$7.86 a share, down 1.3%
  • Its internal issues deepened after a third board member resigned in three months
  • The directors cited differences in opinion regarding an investment in China
  • Analysts are still largely bullish on CDL’s stock in the year ahead
  • Keen to trade CDL? Open an IG account today.

CDL stock kickstarts 2021 on lower ground

Shares of City Developments Limited (CDL) sank on Monday (04 January 2021), following yet another board resignation over its investment in China-based Sincere Property Group.

The counter slid as much as 1.3% to S$7.86 within the first hour of trading. It was down 1.1% to S$7.88 by the midday break.

Tan Yee Peng quit as an independent non-executive director on 30 December 2020 after more than six years in the role. Two days prior, Koh Thiam Hock stepped down as independent non-executive director. Koh, appointed in 2016, had ‘shared his observations, concerns and suggestions’ on the Sincere investment.

And in October 2020, Kwek Leng Peck exited CDL abruptly, after more than three decades as non-executive non-independent director.

Kwek disagreed with the board and management on the Sincere investment and the group’s continuing provision of financial support to the Chinese property firm, among other things.

He is a second-generation scion of the family that controls CDL, being chairman Kwek Leng Beng’s cousin and CEO Sherman Kwek’s uncle.

What is the Sincere investment about?

In April 2020, seeking to become a major property player in China, CDL bought a 51.01% stake in Sincere for 4.39 billion Chinese yuan.

Including that equity investment, CDL’s investments in the Chinese firm amounted to S$1.9 billion as of 21 October 2020. CDL had also subscribed for US$230 million of Sincere’s bonds and provided a 1.5 billion yuan corporate guarantee for a bank loan.

CDL has said Sincere’s liquidity position was ‘challenging’, given the Covid-19 pandemic’s severe impact and China’s property cooling measures.

In November, Deloitte, appointed by CDL to review the investment, found that ‘there are good assets the group can extract further value’ from.

CDL is planning to divest some of Sincere’s retail, hospitality, office and business park assets to lighten the Chinese company’s debt load and shore up its residential development plans.

What impact could the resignations have?

Back in October, OCBC Investment Research wrote that Kwek’s concerns over Sincere were valid, considering China’s increasing scrutiny on leverage in the real estate sector.

However, the analysts said the situation would likely be ‘manageable’ as China’s recovery from the pandemic remained firm.

OCBC believes there could be further impairments ahead, and Sincere-related developments would dampen investor sentiment in the near term.

Apart from these developments, DBS Group Research on 04 January 2021 wrote that CDL will see ‘strong earnings recovery’.

CGS-CIMB in December said it likes CDL for its attractive valuations and potential for asset enhancement opportunities. The stock is among the brokerage’s preferred picks for the Singapore residential property sector.

Out of 11 analysts, nine have a ‘buy’ or ‘overweight’ call on CDL while two rate it ‘hold’. Their average target price is about S$9.45.

How to trade City Developments with IG

Are you feeling bullish or bearish on CDL’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <City Developments> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get commission from just 0.08% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

See more forex live prices


See more shares live prices


See more indices live prices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.