City Developments - RHB Invest 2024-09-25: Beneficiary Of Rate Cut Cycle; BUY

City Developments - Beneficiary Of Rate Cut Cycle; BUY

Published:
City Developments (SGX:C09) | SGinvestors.ioCity Developments (SGX:C09)
  • Due to its relatively high gearing and low debt hedge position among developers, City Developments (SGX:C09) stands to benefit from the larger-than-expected interest rate cuts.
  • With the pace of global real estate transactions expected to pick up, City Developments is in a good position to divest sizeable assets by 4Q and possibly achieve its S$1bn divestment target set earlier this year. A resilient hospitality segment provides additional tailwinds.
  • - Read this at SGinvestors.io -

Financing cost burden could start to ease in FY25 from rate cut outlook.

  • As of 1H24, City Developments’s net gearing stands at 116% and 69% (if investment properties are based on fair value). It has total S$12.1bn of debt, 25% of which is due for refinancing by 1H25. Only 40% of its debt is currently fixed with an average borrowing cost of 4.5% pa. About 50% of its debt is in S$ while the remaining are in GBP (29%), US$ (8%), CNY (4%), JPY (2%) and others.
  • - Read this at SGinvestors.io -
  • For 1H24, City Developments's finance costs stood at S$275m (+25% y-o-y) and accounted for ~40% of its gross profits. Based on our preliminary sensitivity analysis, a ~50bps cut will likely result in ~7% reduction in overall finance costs.

Positive outlook for hospitality and living sector.

  • Read more at SGinvestors.io.





Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2024-09-25



Previous report by RHB:
2024-08-15 City Developments - Shifting To Asset Deleveraging Mode; BUY.

Price targets by 2 other brokers at City Developments Target Prices.

Listing of research reports at City Developments Analyst Reports.

Relevant links:
City Developments Share Price History,
City Developments Announcements,
City Developments Dividends & Corporate Actions,
City Developments News Articles





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