- 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
