City Developments

UOBKayhian on 14 May 2015

FY15F PE (x): 14.9
FY16F PE (x): 12.6

Results below expectations. City Developments (CDL) reported 1Q15 net profit of S$123.0m, up 3% yoy. The property development segment was the largest contributor to PBT (58% of PBT, up 3% yoy), boosted by contributions from property development projects - The Rainfrest, Coco Palms, D’Nest and Jewel @ Buangkok. The strong performance from the hotel segment was primarily due to contributions from the five hotels acquired in 2014, namely The Chelsea Harbour Hotel, Novotel New York Times Square, Grand Hotel Palace Rome, Hotel MyStays Asakusabashi and Hotel MyStays Kamata. The results were below our and consensus expectations, accounting for 18% of our full-year forecast, mainly due to timing differences in recognition of contributions from the property development segment. 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.