SINGAPORE (Feb 21): Jefferies Singapore is keeping its “buy” recommendation on City Developments with a target price of $12.00, after the property developer beat revenue expectations for FY18.
“Full year revenue grew 10% and came in ahead of consensus estimates driven mainly by property development,” says analyst Krishna Guha in a flash note on Wednesday.
CityDev saw its revenue cross the $4 billion threshold for the first time, with a record full-year revenue of $4.2 billion in FY18.
FY18 earning rose 6.7% to $557.3 million, despite a 54.7% drop in 4Q18 earnings to $77.9 million.
See: CityDev ends FY18 with record revenue despite 4Q decline; recommends special 6 cents dividend
“We think CIT is making good progress to grow recurring revenue streams while managing the challenging development environment in Singapore and elsewhere,” Guha says.
In addition, the analyst is positive on CityDev’s dividend growth for the year. “Dividend rose to 20 cents from 18 cents last year… which we view positively,” he says.
The way Guha sees it, CityDev’s valuation looks attractive at 1 standard deviation below mean.
He notes that the stock is trading at 0.85 time book value, which does not include revaluation gains of investment properties as well as hotels.
As at 4.03pm, shares in CityDev are trading 1 cent lower at $9.52.
