City Developments - RHB Invest 2023-05-19: Still Cheap Despite Cooling Measures; Keep BUY

• City Developments's share price has corrected 16% year-to-date, weighed down by cooling measures. Despite a moderated residential outlook, we believe the impact to City Developments’s bottomline is manageable, as its inventory is substantially sold and the remaining landbank is mostly in mass/mid-tier segments. City Developments's global hospitality portfolio (~one-third of RNAV) should continue to see a good recovery.
• - Read this at SGinvestors.io -

Cooling measures impact manageable on residential portfolio.

• City Developments has sold the bulk (~88%) of its launched inventory in Singapore as of April. We estimate ~S$5bn of unbilled residential sales that can be recognised over the next three years. It currently has four projects with ~1,500 units (~S$2bn GDV) in the launch pipeline with an estimated ~80% unsold units in md-tier and mass market segments that are less impacted by the latest government cooling measures aimed mainly at foreigners and investors.
• - Read this at SGinvestors.io -
• In light of the recent measures, City Developments said it will defer its upcoming new launch – Newport Residences (its only high-end project in its pipeline) – while the remaining projects are likely to go ahead as per schedule.
• Overall, we revise our FY23F-24F earnings forecast for City Developments lower by 9% and 8%, mainly by deferring launch recognition and slightly slower sales.

Hospitality segment set to stay buoyant.

• Read more at SGinvestors.io.

Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2023-05-19 SGinvestors.io

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