Event
City Developments (CDL) reported a 1H10 PATMI of $304m, a 36%
yoy improvement, led by robust property development profits. The
results are largely in line with our expectations and we anticipate
even stronger earnings in 2H10, as at least two development projects
will start to contribute to earnings. CDL has also set up a company to
look into investment opportunities in China. Maintain BUY.
Our View
Property development continued to be the mainstay of the group,
contributing about 53% of 1H10’s pre‐tax profit. The profits from
three sold‐out or substantially sold‐out projects have yet to be
recognised; we estimate that at least two should feature in 2H10.
The hotel business under Millennium & Copthorne is showing strong
signs of recovery, buoyed by RevPAR growth of 33% yoy in Singapore.
The 150‐unit freehold condominium on the site of the existing
Copthorne Orchid Singapore hotel is expected to be launched next
month. We estimate an ASP of $1,700 psf, which could mean an
accretion of 6 cents a share to CDL’s RNAV from the development
profits.
A new subsidiary, CDL China Limited (CDLCL), has been set up to drive
CDL’s expansion in China. CDLCL has an initial capital of $300m to
look for investment opportunities in Tier 1 and 2 cities, ranging from
residential to commercial developments. Nevertheless, Singapore is
expected to remain CDL’s key focus in the short‐to‐medium term.
No comments:
Post a Comment