3Q13 PATMI decreased 10.4% YoY mostly due to the absence of disposal gains booked in 3Q12 for the sale of several industrial strata assets. Due to slower than anticipated recognition at development projects, 9M13 PATMI cumulates to only 66.3% of our FY13 forecast and we judge the latest quarter to be a miss. We lower our FY13 PATMI forecast by 11.4% to S$617.0m. Management indicates that it is turning increasingly cautious of the domestic residential space and will focus on developing its overseas growth engines in London and China. In particular, the group is actively pursuing acquisition opportunities in London and is confident of securing more sites in due course. Maintain HOLD with a lower fair value estimate of S$9.98 (30% RNAV disc.), versus S$11.38 previously, as we opt to raise our RNAV discount closer in line with those at listed peers and to reflect a softer domestic residential outlook.
3Q13 numbers below view
3Q13 PATMI decreased 10.4% YoY mostly due to the absence of disposal gains booked in 3Q12 for the sale of several industrial strata assets. Due to slower than anticipated recognition at development projects, 9M13 PATMI cumulates to only 66.3% of our FY13 forecast and we judge the latest quarter to be a miss. We lower our FY13 PATMI forecast by 11.4% to S$617.0m. 3Q13 topline also decreased 1.2% YoY to S$822.7m mainly due to a weaker contribution from the property development segment which dipped 6.4% YoY to S$326.3m. We note, however, that the group has not to date recognized any profits from its three EC projects which will be booked fully only upon attaining TOP.
Cautious on the domestic residential space
Leasing activities for the office component of the South Beach project has begun though CityDev will likely take a wait-and-see stance for the launch of the residential units. Completion for the project is on track for 2015. Management indicates that it is turning increasingly cautious of the domestic residential space and will focus on developing its overseas growth engines in London and China. In particular, the group is actively pursuing acquisition opportunities in London and is confident of securing more sites in due course.
Hotel margins hit by higher operating costs
3Q13 PBT for the hotel segment decreased by 11.4% YoY to S$49.3m due to higher operating costs and difficult trading conditions in most Asian destinations. That said, revenues from the segment increased marginally (up 3.3% YoY) to S$393.8m due to contributions from the newly opened W Singapore Sentosa Cove Hotel and recently refurbished hotel rooms being re-instated into the supply.
Maintain HOLD; lowering FV to S$9.98
Maintain HOLD with a lower fair value estimate of S$9.98 (30% RNAV disc.), versus S$11.38 previously, as we opt to raise our RNAV discount closer in line with those at listed peers and to reflect a softer domestic residential outlook.
3Q13 PATMI decreased 10.4% YoY mostly due to the absence of disposal gains booked in 3Q12 for the sale of several industrial strata assets. Due to slower than anticipated recognition at development projects, 9M13 PATMI cumulates to only 66.3% of our FY13 forecast and we judge the latest quarter to be a miss. We lower our FY13 PATMI forecast by 11.4% to S$617.0m. 3Q13 topline also decreased 1.2% YoY to S$822.7m mainly due to a weaker contribution from the property development segment which dipped 6.4% YoY to S$326.3m. We note, however, that the group has not to date recognized any profits from its three EC projects which will be booked fully only upon attaining TOP.
Cautious on the domestic residential space
Leasing activities for the office component of the South Beach project has begun though CityDev will likely take a wait-and-see stance for the launch of the residential units. Completion for the project is on track for 2015. Management indicates that it is turning increasingly cautious of the domestic residential space and will focus on developing its overseas growth engines in London and China. In particular, the group is actively pursuing acquisition opportunities in London and is confident of securing more sites in due course.
Hotel margins hit by higher operating costs
3Q13 PBT for the hotel segment decreased by 11.4% YoY to S$49.3m due to higher operating costs and difficult trading conditions in most Asian destinations. That said, revenues from the segment increased marginally (up 3.3% YoY) to S$393.8m due to contributions from the newly opened W Singapore Sentosa Cove Hotel and recently refurbished hotel rooms being re-instated into the supply.
Maintain HOLD; lowering FV to S$9.98
Maintain HOLD with a lower fair value estimate of S$9.98 (30% RNAV disc.), versus S$11.38 previously, as we opt to raise our RNAV discount closer in line with those at listed peers and to reflect a softer domestic residential outlook.
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