City Developments

UOBKayhian on 18 Dec 2014

FY14F Dividend yield (%): 1.6
FY15F Dividend yield (%): 1.6
We believe CDL has managed to securitise the Quayside Collection at attractive
valuations, setting precedence of yet another channel to monetise mixed development
projects. CDL's effective stake in Quayside Collection will drop to 37.5% while gearing
will improve to 25%. However, execution risks in diversifying overseas and into other
asset classes remain a concern. Maintain HOLD. Target price: S$10.84. Entry price:
S$8.70.
We believe CDL has managed to securitise the Quayside Collection at attractive
valuations of S$2,400psf for The Residences at W Singapore, about S$1.6m per room
key for W Hotel and over S$2,500psf for the retail component. The deal sets
precedence of yet another channel to monetize mixed development projects.
Developers could take cue from this transaction to explore similar structures for their
portfolio. GuocoLand, for example has an integrated development at Tanjong Pagar.
CDL also has the upcoming South Beach integrated development project.
Maintain HOLD and target price of S$10.84. The impact on RNAV is minimal as the
overall valuation for CDL’s Sentosa portfolio is broadly in line with our expectations.
While Sentosa portfolio has been monetised at attractive valuations, execution risks in
diversifying overseas and into other asset classes remain a concern. Maintain HOLD
and target price of S$10.84, pegged at a 20% discount to our RNAV of S$13.55/share.
Entry price is S$8.70.