City Developments - UOB Kay Hian 2023-08-11: Strong 1H23 EBITDA Growth Overshadowed By Financing Costs & One-Off Items

• City Developments reported a muted 1H23 that was impacted by one-off items and financing costs as well as a poor comparison vs 1H22 that included a large divestment gain from its hotel segment. Stripping out the exceptional items, EBITDA rose 48% y-o-y which was above our expectations.
• - Read this at SGinvestors.io -

A muted first half.

• City Developments (SGX:C09) reported revenue of S$2.7b for 1H23 (+84% y-o-y) which was boosted by the completion of the Piermont Grand Executive Condominium (EC) and thus full revenue recognition of the project. Its EBITDA of S$478m (excluding divestment gains and impairments) was 48% higher than the year-ago period and beat our expectations but missed consensus’.
• - Read this at SGinvestors.io -
• A special interim dividend of S$0.04/share was declared (1H22: S$0.12). See City Developments's dividend date.
• The S$34m impairment loss seen in 1H23 related to City Developments’ UK investment properties witnessed a 20-50bp in cap rate expansion, thus leading to a drop in its valuation. Although financing costs in the UK has risen by 4x vs same period last year, City Developments' management sees near-term stabilisation and continues to believe that its UK investment properties have bright prospects.
• In addition to the impairment loss, there was also a fair value loss on property-linked notes for an Australian project (S$20m).

Singapore residential sector looking stable.

• Read more at SGinvestors.io.

Adrian LOH UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-08-11 SGinvestors.io

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