City Developments Limited (SGX: C09) announced a quarterly dividend of S$0.1 per security to its unitholders on November 4, 2022.
For the half-year that ended on June 30, 2022, CDL (City Developments Limited) turned from its net loss of S$32.1 million for 1H 2021 to a profit of S$1.1 billion for 1H 2022.
The gains come from the sale of Millennium Hilton Seoul & its adjoining land side and the deconsolidation of CDL Hospitality Trusts from the group.
CDL’s share price has increased by over 14% since the beginning of the year.
Is CDL Worth Buying?
City Developments Limited (C09) is a buy choice for investors opting for regular income streams and long-term capital appreciation. Besides, the stock is trading at a low price of 0.77 times the book value and for a trailing price-earnings ratio of 5.93 only.
Also: Investment in Singapore for Beginners and DCA Investing
About CDL
City Developments Limited is a public-listed company on the Singapore exchange regulated by the monetary authority with a market capitalization of S$7 billion. CDL is an investment holding company engaging in property ownership and development.
The business comprises four operating segments: property development, investment properties, hotel operations, and fund management.
The property development segment develops and purchases residential properties for sale. The investment properties segment deals with developing and managing office and retail properties for sale. The hotel operations segment carries out acquiring and managing hotel businesses. The fund management looks for co-investing opportunities with partners in property businesses. The company began the property business in Singapore in 1963.
Share Prices of CDL (C09)
The following table summarizes the recent changes and returns of CDL:
| City Developments Limited* | Share price | Share price | Returns |
|---|---|---|---|
|
Year-to-date |
S$6.84 as at Jan 03, 22 |
S$7.81 as at Nov 08, 22 |
+14.18% |
|
Past year period |
S$7.20 as at Nov 08, 21 |
S$7.81 as at Nov 08, 22 |
+8.47% |
Dividend
| City Developments Limited* | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
|
Trailing dividend per share |
S$0.16 |
S$0.20 |
S$0.20 |
S$0.14 |
S$0.15 |
|
Trailing dividend yield |
0.64% |
0.99% |
0.73% |
0.99% |
1.17% |
Dividend Payout Schedule
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
|
Payable dates* |
|
|
|
|
|
The market data are attributable to Morningstar.
What do Analysts Say?
UOB Kay Hian
UOB remains a “Buy” opinion. CDL ascribes the extraordinary profits to 2 project sales in South Korea in the first half of 2022 and the deconsolidation of CDL Hospitality Trust (SGX: J85). The company declares a special dividend of S$0.12 per ordinary share.
The hotel segment has outperformed others in the same period and will continue to do so in the second half of this year. The room occupancy rate has increased to 59% while RevPAR (revenue generated per available room) has risen by 110% to S$114. UOB believes the segment will continue to improve in the remaining months of 2022 due to more border relaxation measures.
Like the first half year, CDL may repeat the process by selling 2 property projects to enhance performance: Golden Mile Complex and Tanglin Shopping Centre.
CDL improved its gearing ratio to 83% in 1H22 compared to 99% in 1H21. However, it will likely bear more costs due to rising interest rates in the second half and the following year.
In the fund management segment, CDL’s fund manager will look to PBSA (purpose-built student accommodation assets) to meet demands in the UK, Japan, and Australia and give group companies priority to buy its assets.
UOB forecasts CDL to launch a share buyback program to support its share price. Therefore, it upgrades the stock price from S$9.2 to S$9.87.
DBS Research
DBS maintains a “Buy” rating. Excluding the divestments of 2 projects, CDL’s 1H22 PATMI turns to profits of S$110 million, reversing the net loss of S$432 million in 1H21. The EBITDA has grown to S$322 million by 19% year-on-year.
The hospitality segment recorded S$15 million in 1H22 compared to the loss of S$143 million in 1H21. CDL will record more growth after China opens its border.
The residential segment sees market resilience and plans to sell more than 2,000 units in the last quarter of 2022 despite a higher interest rate environment.
CDL sees strong rebound and growth in occupancy and rentals from its commercial assets like Republic Plaza, Quayside Isle (W Hotel), and City Square Mall.
DBS revised its earnings outlook forecast by 69% for 2022 due to sales of 2 projects in South Korea and ongoing divestments of Tanglin Shopping Center and Golden Mile Complex. The brokerage predicts CDL may declare a final dividend of 8 cents and a special interim dividend of 6 cents per share for the fiscal year.
Conclusion
Property stocks are one of the few safety assets investors flock to, especially during the global financial crisis. City Developments Limited (C09) offers investors regular dividend income and long-term capital appreciation opportunities. However, investors should know the risks a rising interest rate environment and a possible recession may bring to CDL before investing.
Key takeaways
- CDL is an ideal option for long-term investors opting for capital appreciation and regular income.
- CDL keeps paying special interim dividends besides regular ones.
- Rising interest rates and possible recession may affect CDL’s performance.
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