City Developments

UOBKayhian on 28 Feb 2014

FY14F PE (x): 12.4
FY15F PE (x): 10.9

Results in line with expectations. City Developments (CDL) reported a 4Q13 net profit
of S$221.0m, down 11.4% yoy and bringing full-year 2013 net profit to S$683m, +0.7%
yoy. The full-year results included the following one-off items: a) divestment gains of
S$190.6m from the sale of its non-core industrial assets (100G Pasir Panjang, strata
units in Elite Industrial Building I, Elite Industrial Building II and Citimac Industrial
Complex) and a subsidiary in China and India, b) impairment losses of S$27m mainly
from its overseas hotel and investment properties, and c) writebacks, fair value changes
and exchange differences totalling S$3.4m. Excluding these one-off items, the core
PATMI of S$529.7m is in line with our expectations and accounts for 98% of our full-year
forecast. Upgrade to BUY with an unchanged target of S$10.84/share, pegged at a 20%
discount to our RNAV of S$13.55/share. CDL’s share price has corrected by 25% from
its high last year, underperforming the market by 10% yoy. At these levels we believe
that market has overdiscounted the negative prospects. The stock is trading at a steep
31% discount to RNAV.