Terence Chua of PhillipCapital has kept his “accumulate” call and $8.86 on City Developments following news that the developer has fully sold its latest project.
Copen Grand, a 639-unit executive condominium, was fully sold within a month of launch. Chua estimates CDL to make a “comfortable” margin of 25% from this project from the average selling price of $1,300 psf.
Chua also notes that CDL’s hospitality segment continues to benefit from pent-up demand as tourists are across the world, driving up RevPAR by 100% y-o-y.
“Hotels in Singapore, US and Europe continued to recover faster than those in Asia, though average room rates increased across all regions, signalling a strong recovery momentum,” says Chua.
However, Chua warns that the Singapore residential market might see a slowdown, judging from the 3Q2022 statistics. CDL sold 95 units with total sales value of $281 million versus 414 units with total sales value of $784.4 million in the same period last year.
Chua’s unchanged target price of $8.86 is based on a 35% discount to CDL’s RNAV of $13.64.
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He continues to see CDL as a proxy for the Singapore residential market and hospitality recovery.
“Asset monetisation, unlocking value through AEIs and redevelopments, and faster-than-expected recovery in the hospitality portfolio are potential catalysts for CDL, which could help narrow the discount between CDL’s share price and RNAV,” writes Chua.
CDL shares last traded at $8.14, down 1.21% for the day.
