Is City Developments Limited worth S$9 a share?

Analysts envision a 22% stock upside for the property development group, which recently said it made applications to list one of its real estate investment trusts (REITs).

  • City Developments Ltd (SGX: C09) share price closes the week lower at S$7.65
  • The property developer confirmed it has made applications for the initial public offering (IPO) and listing of one of its REITs with UK-based commercial assets
  • The IPO could potentially raise up to S$940 million on the SGX, Bloomberg reported
  • Analysts see a 22% upside on the blue-chip stock in the next 12 months
  • Ready to trade Singapore stocks? Open an account today

CDL share price: What’s the latest?

City Developments Ltd (CDL) shares have declined 1.5% since confirming it has submitted applications for the listing of a REIT with UK-based commercial assets on the mainboard of the Singapore Exchange (SGX-ST).

‘The company wishes to update that the relevant applications have been made to the various regulatory authorities, including the SGX-ST and Monetary Authority of Singapore,’ it said in a bourse filing on Friday (04 June 2021).

The proposed IPO and listing on the SGX-ST is subject to, among others, market conditions, the requisite regulatory and other approvals being obtained, as well as the execution of definitive agreements by the relevant parties.

The property developer further noted that ‘no decision has been made as to whether the transaction will take place and there is currently no certainty that the company will proceed with the offering’.

It will also issue an announcement in the event that there is any material development on the matter.

According to a Bloomberg report, the IPO could raise some £500 million (S$940 million) on the SGX, with a portfolio size of roughly £1.8 billion. An unnamed source also said CDL is aiming to launch the REIT by the third quarter of 2021.

The blue-chip counter is down 3.8% year to date. Analyst sentiments published by SGX StockFacts show a consensus rating of ‘outperform’ and average target price of S$9.32 on the stock.

The price target represents a 21.8% from CDL’s last traded price of S$7.65 on 11 June 2021.

‘Strong’ residential sales in Q1; cooling measures could kick in

The group and its joint venture (JV) associates said in an operational update last month that they sold 319 residential units with a total sales value of S$513.6 million in Q1 2021.

This represented a 72% increase in units sold over the same period last year. A total sales value of S$278.1 million from sales of 185 units was recorded in Q1 2020.

CDL said the sales were ‘well spread out’ among the various property categories ranging from executive condominiums to luxury apartments. In particular, Amber Park performed ‘strongly’ with sales of around 100 units.

This was despite Group Chairman Kwek Leng Beng’s earlier warning that ‘there may be a time that further measures could be introduced to control the prices’ of residential properties.

Such a move could be possible if property prices continue to rise, he had said in response to a shareholder question during CDL’s 58th Annual General Meeting on 30 April 2021.

On the other hand, Mr Kwek expressed confidence that the office market will continue to improve, citing higher occupancies at Republic Plaza.

As of March 2021, the committed occupancy of CDL’s Singapore office and retail portfolio remained ‘resilient’ at 91.4% and 92.1% respectively, above the island-wide occupancy of 88.1% and 91.5%.

The chairman also shared that he was optimistic that the hotel industry would be able to recover some time this year, or at the worst, next year with the resumption of air travel between countries being considered.

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