City Developments - Lifted By Better Hotel Operations & One-Offs
- City Developments (SGX:C09) reported a 23.5% rise in 1H22 revenue to S$1.47bn, mainly from better hotel segment performance. PATMI of S$1.13bn turned around from a loss in the previous year, due to higher hospitality contributions and S$1.4bn worth of one-off gains from the divestment of the Seoul Millennium Hotel and negative goodwill arising from the distribution in specie of CDL Hospitality Trusts (SGX:J85) units in May 2022. Excluding one-offs, City Developments's PATMI would have amounted to S$110.3m in 1H22.
- Property development segment posted a PBT of S$104m, with profit recognition from Singapore and China projects as well as New Zealand property sales.
- Hotel operations achieved a PBT of S$1.325bn, underpinned by improved operating performance and divestment gains. Excluding the latter, this segment recorded a PBT of S$15m compared to a loss in the previous period. Portfolio RevPAR more than doubled to S$113.6 while gross operating profit (GOP) margin improved 12% points to 24.7% in 1H22. Occupancy rate increased significantly in Europe and US.
- City Developments proposed a special interim dividend of S$0.12. In terms of capital management, City Developments’s net gearing ratio (after fair value adjustment) was stable q-o-q at 52% at end-1H22 with strong cash reserves of S$4.1bn.
- We lower our FY22-24F earnings per share (EPS) forecast for City Developments by 0.5-20.8% to factor in the exceptional items. Management shared that the collective sale of Tanglin Shopping Centre and Golden Mile Complex could potentially be completed towards year end. We have not included any gains from these sales, pending details of the transactions. Our target price of S$8.97 for is based on a 45% discount to City Developments's RNAV of S$16.30.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2022-08-12 2022-08-12
Previous report by CGS-CIMB:
2022-05-24 City Developments - Recovery Momentum From Hotel Segment
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